Will the S&P 500 Crash in 2026? History Offers a Strikingly Clear Answer.

Market Performance - The S&P 500 achieved a 16% annual gain in 2025, following over 20% increases in each of the previous two years, driven by excitement around artificial intelligence (AI) stocks and general economic optimism [1] - The stock market experienced volatility in 2025, particularly in March and April, due to concerns over U.S. import tariffs affecting earnings of major tech companies [4] - Despite initial downturns, the market rebounded as investor confidence was restored through negotiations and exemptions for U.S. companies, leading to renewed growth in AI-related stocks [5] AI Impact - AI is revolutionizing business operations, benefiting both users and developers by streamlining processes, accelerating innovation, and enhancing earnings potential [1] - Developers and sellers of AI services are experiencing significant revenue growth, contributing to the overall market performance [1] - Concerns about a potential AI bubble emerged in late 2025, but stocks recovered as companies reported strong demand and ongoing earnings growth related to AI [6] Future Outlook - The ongoing bull market, which has lasted over three years, raises questions about a potential downturn for the S&P 500 in 2026, as historical trends suggest that the index does not continuously rise [2] - Valuation concerns are highlighted by the S&P 500 Shiller CAPE ratio, indicating that stocks are trading at historically high levels relative to earnings [7]