S&P 500 Caps Third Straight Winning Year as Bull Market Stretches into 2026 — Traditional Finance Finally Gets a Streak

The S&P 500 just locked in its third consecutive year of gains, pushing a historic bull run straight into 2026. Forget a pause—this market's got stamina.

### The Engine Behind the Run

What's fueling it? A mix you've heard before, but it's working: resilient corporate earnings, a Federal Reserve playing a cautious game with rates, and investors who still believe in the old-school growth story. It's a testament to traditional finance's stubborn durability, even as digital alternatives knock on the door.

### The 2026 Question Mark

Stretching into a fourth year? That's the big bet. Analysts are split—some see the fundamentals holding strong, others whisper about valuations looking a little too comfortable. It's the classic Wall Street tug-of-war between greed and the nagging voice of caution.

Three straight wins is a feat. Making it four would enter rarified air. The market's running on proven fuel, but every bull eventually needs a rest—or finds a wall. Just ask any crypto trader who's seen a cycle; traditional markets move slower, but the laws of gravity still apply. The real question isn't about the streak, but what happens when the music for this particular party finally slows.

Wall Street leans bullish as valuations cool

That stretch of flat trading has played a role in cooling parts of the market. Several AI‑linked stocks lost their sense of inevitability, speculative behavior eased, and pricing pressures relaxed.

The Nasdaq 100 now trades at a forward price‑to‑earnings ratio of 26, which sits a couple of points below its two‑year average. Its valuation premium over the broader S&P is the narrowest it has been in more than six years.

Optimism remains heavy, though expectations are now higher. FactSet shows 57.5% of analyst ratings on S&P 500 companies are marked as Buys, matching the highest level seen since February 2022, a moment that came just before a nine‑month bear market.

Bespoke Investment Group noted that the index’s trailing three‑year return of 87% at its October peak ranks in the top 5% of all such periods on record. History shows gains usually continue after similar runs, but they tend to be far weaker than average.

Election cycles also sit in the background. Some past midterm election years have produced long stretches where prices went nowhere, suggesting muted upside and months of stalled momentum in 2026.

Even so, broad trends never act alone. This year’s 16.2% gain did not come from only a handful of names. The equally weighted S&P 500 has risen 10.7%, though the gap still shows the risk of holding too little exposure to the biggest stocks.

If Nvidia, Alphabet, and Broadcom had finished the year flat, the index’s gain WOULD have been about one‑third lower.

Defense stocks deliver rare high‑risk rally

Away from tech, defense stocks produced one of the market’s loudest moves. The S&P 1500 Aerospace and Defense group, made up of 24 companies, is heading toward a 41% jump, its strongest year since 2013, helped by demand in commercial aerospace.

That return is more than double the S&P 500’s rise and roughly 16 percentage points ahead of the Magnificent Seven, according to data from CNBC.

In Europe, weapons makers such as Rheinmetall, Saab, and Leonardo climbed as governments moved to sharply increase military budgets.

In the United States, established players like RTX and Northrop Grumman logged double‑digit gains, supported by enthusiasm around military spending and projects like the Golden Dome missile‑defense program.

Concerns that President Donald Trump’s administration could push contractors to rein in buybacks and dividends barely slowed investor demand.

But Kratos and fellow drone Maker AeroVironment issued mellow outlooks in Q3, and their shares fell hard, pulling AeroVironment down roughly 40% from its October high.

Even after the pullback, Kratos trades NEAR 100 times expected earnings for the next year, while Palantir sits above 190. By comparison, RTX is valued at 27 times earnings, and Lockheed Martin, known for the C‑130 Hercules transport plane, trades at 16.

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