The S&P 500 rose nearly 15% in the first half. History says this will happen next.

The answer to a crucial question came out in the first days of the year. Everyone was wondering if the market had moved into bull territory — then S&P 500 (^GSPC 0.10%) hit a record high, confirming that a bull market had indeed arrived. Even better, the index continued to hit new highs and closed the first half of the year with a gain of nearly 15%.

As we enter the second half, it’s only natural to look ahead and consider what the market might do in the coming months. Technology stocks, particularly those involved in the high-growth field of artificial intelligence (AI), led the first-half rally as investors rushed into these companies with growing earnings and bright long-term prospects. These stocks may continue to rise — or they may pause if they appear to be climbing too quickly. And, because of the weight of these players in the index, this could determine the direction in the second half.

So what will the market do next? It’s time to turn to history for some clues.

One of the best performances in 25 years

Historically, a solid first half has led to a successful second half. Since 1950, of the 22 times the index has risen 10% or more in the first half, 18 of those times the market continued to advance in the second half, according to a JP Morgan Wealth Management Report, and the average annual profit reached 25%. This year, the index has performed particularly well, for the fifth-best first half in the past 25 years, the data show.

All of this means that, if the market follows its more usual historical pattern, we can expect more gains in the second half of the year — and perhaps even see an annual increase of around 25%.

But before we start cheering, it’s important to note that while the S&P 500 has followed this path many times, that doesn’t mean the index will. ANY the time. The S&P 500 could surprise us in the second half, either positively or negatively. However, it is a good idea to consider historical patterns because they have occurred so often that they represent reasonable possibilities.

Now let’s examine what actually drove the index higher in the first half of the year and whether this move can continue. Just four stocks accounted for more than half of the S&P 500’s first-half gains, the JP Morgan report showed — these are Nvidia, Microsoft, AlphabetAND Amazon. That’s because these are among the most heavily weighted stocks in the index, and each rose by double digits (and triple in the case of Nvidia).

NVDA data from YCharts

Can the momentum continue?

It is possible that the momentum will continue in the second half for several reasons. We’re in the early days of AI development, with today’s $200 billion market predicted to reach over $1 trillion later this decade. This suggests that companies will increase investment in AI projects, driving revenue growth at tech companies that provide chips and other AI products and services.

Also, these AI players have catalysts ahead as they expand and develop their AI offerings. For example, Nvidia is set to launch its new Blackwell architecture and chip later this year. Positive news from the company could support more gains in the stock price, and that could translate into upside for the S&P 500.

It’s also possible that, despite these companies’ strong long-term AI prospects, their shares will see a pause in the second half of the year. Stocks generally don’t go up forever, and instead go through periods of stagnation or decline here and there. If some of these heavyweights suffer in the second half, it could hurt the index’s performance.

Finally, if these major players don’t make extreme moves, stocks from other industries can provide direction for the index — following corporate and economic news. For example, the Federal Reserve has signaled an interest rate cut later this year, and although earlier expectations were for more cuts, this still represents a positive move for stocks.

Of course, as mentioned above, it is impossible to guarantee what the market will do in the second half of the year. There’s reason to be optimistic about the months ahead thanks to the S&P 500’s strong historical trend — but the best news of all is that performance in just a few months doesn’t matter when you’re investing for the long term.