After a New Record High, Will the S&P 500 Soar in the Second Half? Here's What History Says.
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The S&P 500 (^GSPC 0. 78%) hit rough waters earlier this year amid concern that President Trump's tariff plan would hurt the economy, but the index since recovered and even...
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July 3, 2025
06:15 AM
The Motley Fool
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The S&P 500 (^GSPC 0. 78%) hit rough waters earlier this year amid concern that President Trump's tariff plan would hurt the economy, but the index since recovered and even closed the quarter and first half of the year at a record level
Will the index continue to soar from here in the second half
History suggest the answer is yes
Let's check out the details
Image source: Getty images
The stock market's first-half turmoil So, first, let's quickly recap what happened over the past few months
The S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average all declined as investors worried the effects of the president's import tariffs on the consumer's wallet and companies' budgets -- and that created a potential blem for corporate earnings
The idea was that players across industries could lose as prices rise and their customers spend less
As a result, investors avoided stocks, but particularly growth ones, as growth stocks generally rely the most on a bright economic situation in order to expand
That means any threat to the economy could weigh on appetite for these s of stocks
And this is exactly what happened to artificial intelligence (AI) stocks, the players that led market gains last year
In recent weeks, though, investor sentiment has imved as the U
Embarked on trade talks with various countries and even signed deals with the U
It became that tariff levels wouldn't be as high as originally expected, representing less of a headwind for growth
On top of that, growth players from Nvidia to Alphabet dered strong earnings reports, and messages from companies showed they continue to invest and spend
Meta Platforms even increased its capital spending forecast and just recently went on a hiring spree to boost its AI gram
All of this has been good news for the stock market, and as a result, all three major indexes the first half of the year in positive territory
The S&P 500's path from here Now let's look to history for clues the S&P 500's path from here
The benchmark made the ing moves over the past several years: Year S&P 500 First-Half Performance S&P 500 Full-Year Performance 2018 1. 2%) 2019 17% 28% 2020 (4%) 16% 2021 14% 26% 2022 (20%) (19%) 2023 15% 24% 2024 14% 23% Data sources: YCharts, Macrotrends
What's most compelling here is the trend in the late part of the first half generally predicted the full-year outcome
For example, the index the first half of 2018 in the positive, but it was on the decline from an earlier high -- and it went on to decrease for the full year. ^SPX data by YCharts Conversely, in 2020, though the index fell in the first half, it that period on the rise, and the index rose for the full year. ^SPX data by YCharts What history shows us So over the past seven years, history shows us that the tone at the end of the first half sets the stage for what happens next
If the index has climbed or is on the rebound from a lower point, it's generally the year with a gain
This suggests that the S&P 500, even after reaching a record high, could be on track for a win in the second half of 2025 and even could climb by double digits. ^SPX data by YCharts Of course, it's important to remember that the stock market doesn't always historical trends and could make a move that will surprise us
But, by considering what's happened in the past, we can get a general sense of what might be ahead
And if history is right this time around, there's reason to be optimistic the second half of this year, especially since, as mentioned above, investor sentiment has imved
The element weighing on investors -- the trade situation -- has gressed in a positive direction, and if more satisfactory deals are signed, this could fuel stock market gains
That's fantastic, but here's the best news of all: Regardless of the S&P 500's direction this year, the index always has gained over the long term -- and that greatly increases your chance of scoring a big win if you buy and hold
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors
Adria Cimino has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia
The Motley Fool has a disclosure policy.
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