Bull market for two consecutive years
In 2023 and 2024, the performance of U.S. stocks was very impressive, with the S&P 500 index, representing U.S. stocks, achieving a rare return of more than 20% for two consecutive years. Investors are certainly happy, but many are curious about S&P 500 bull return in a row, what will happen next, from past 100 years data?
How did the S&P 500 index come about?
In the 1920s, Standard & Poor’s began operating multiple indices, including industrial, transportation, utilities and financial stock indices. On March 4, 1957, the company decided to merge the above four indexes into one, which became the S&P 500 index that everyone sees today, including the stocks of 500 large U.S. listed companies.
Has this ever happened before?
According to the figures in my post of “A table comparing S&P 500, Nasdaq, Dow Jones, Philadelphia Semiconductor Index over the years since its inception and annualized returns“, since the S&P 500 index was officially launched in 1957. It really only happened once.
However, if the S&P 500 index was restored by back-tracing the industrial, transportation, utilities and financial indices operated by Standard & Poor’s from the 1920s to 1956, this happened twice.
In the past 100 years, the S&P 500 index returns have risen by more than 20% for two consecutive years twice. So what happens after S&P 500 index return exceeds 20% in a row?
Painful memories of these two periods
I recall the situation at that time as follows:
1935 to 1941
Year | % Change |
1941 | -17.86% |
1940 | -15.29% |
1939 | -5.45% |
1938 | 25.21% |
1937 | -38.59% |
1936 | 27.92% |
1935 | 41.37% |
In late 1937, the U.S. stock market experienced a sharp decline as part of a larger economic recession that lasted through much of 1938.
This recession, known as the 1937-1938 recession, was the third worst recession in the United States during the 20th century. The recession was caused by a variety of factors, including: confused signals from the government about its policy objectives, a contraction in the money supply, and contractionary fiscal policy.
The U.S. stock market briefly rebounded for one year in 1938, but then had negative returns for three consecutive years, and had to wait until 1942 to return to positive returns.
1995 to 2000
Year | % Change |
2000 | -10.14% |
1999 | 19.53% |
1998 | 26.67% |
1997 | 31.01% |
1996 | 20.26% |
1995 | 34.11% |
Then came the dot-com bubble, and coupled with the 9/11 attacks in September 2001, the U.S. stock market performed poorly throughout the decade from 2000 to 2010.
Excluding the impact of inflation, it took the S&P another four years to return to its 2000 high, while the Nasdaq didn’t fully recover until March 2015.
Closing words
In the past 100 years, there have been two times when the S&P 500 index returns exceeded 20% for two consecutive years, representing a bull market. The results were both tragic, causing the U.S. stock market to perform poorly for many years. This proves the old saying that stock prices cannot grow to the sky and that we should always be prepared for danger.
Note: A 20% rise in the stock market represents a bull market.

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