The stock market's back-to-back gain of more than 20% may be setting the stage for another rally in 2025

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• The S&P 500 should continue its bull rally into 2025, according to strategist Ryan Detrick.
• Historically, the S&P 500 often sees further gains after consecutive years of more than 20% returns.
• A strong economy and rising corporate profits support a bullish stock market outlook.

The S&P 500 surged 26% in 2023 and is on track for a 27% gain in 2024.

While it may seem like 2025 has a tough act to follow, Carson Group chief market strategist Ryan Detrick says the odds are pretty high that another year of big gains is ahead for investors.

In a Monday note, Detrick highlighted that history suggests stocks will likely extend their bull rally next year and deliver returns higher than their average annual return of about 10%.

“The bears might be disappointed to find that strong returns after back-to-back 20% years is perfectly normal,” Detrick said.

Since 1950, there have been eight times the S&P 500 gains 20% or more two years in a row. In six of those eight times, the third year saw positive gains, with an overall average and median return of 12% and 13%, respectively.

“The bottom line is up 20% two years in a row actually suggests the potential for better than average returns in 2025, something we are on record in expecting next year,” Detrick said.

The fundamental reasons behind Detrick’s bullish view on the stock market next year include an overall solid economy and rising corporate profits.

“When you have an economy that continues to surprise to the upside, you tend to have solid earnings,” Detrick said, adding that the S&P 500’s earnings per share is expected to hit $269 next year, up 19% from early 2023.

“There is no holy grail when it comes to investing, but when we saw earnings estimates making new highs, we took it as a big reason to be overweight equities and still do,” Detrick said.

Finally, Detrick said that “bull markets last longer than you think” with an average age of 5-and-a-half years.

With the current bull market turning two years old in October, Detrick said that suggests there is plenty of runway ahead for the stock market, even after the last two years experienced a stellar bull rally.