Three consecutive years of double-digit returns raise concerns of a potential correction despite strong tech sector performance.
The S&P 500 has climbed steadily since its 2022 low, defying risks like tariffs, inflation, and slowing growth. Earnings growth, driven by artificial intelligence investments, reached a four-year high, fueling gains in tech and growth stocks.
Double-digit returns for three straight years—and a potential fourth in 2026—are historically rare. Similar streaks preceded corrections, including the 2000 tech bubble burst and the 2022 downturn. Analysts warn that prolonged bull markets increase the likelihood of a pullback.
Investors are advised to prioritize fundamentals, as speculative or fast-growing stocks often face sharper declines during downturns. High-quality stocks with strong financials tend to offer better downside protection in volatile conditions.