The stock market is about to do something so rare that it last happened 30 years ago

The stock market is expected to rise more than 20 percent for the second year in a row – a remarkable feat that the market has not achieved since the late 1990s.

The S&P 500 is on track to rise more than 20 percent this year, after a 24 percent gain in 2023.

Back-to-back rallies above this benchmark would be the best performance for the index since the 1997 and 1998 dot-com bubble, according to FactSet data.

The S&P 500 tracks the performance of the 500 largest companies in the US, including major technology companies such as Amazon and Apple, and banks such as JPMorgan Chase and Bank of America.

Since its inception in 1957, the index has typically achieved an average annual return of 10 percent.

Index predecessors also achieved these high consecutive gains only three times, CNN reported, in 1927 and 1928, 1935 and 1936 and in 1954 and 1955.

Despite being in a slump in the last few weeks of 2024, the stock market has had a successful year, which was boosted in November by the re-election of Donald Trump.

Rising stock market returns are good news for Americans invested in 401(K) and IRA retirement plans, which are typically invested in the major market indexes. That means when Wall Street makes profits, so do their savings.

Wall Street posted impressive returns this year as inflation cooled and consumer spending remained strong, while the labor market appeared solid but slowed, CNN reported.

Investors were also optimistic about strong gains for technology stocks, including Nvidia, Apple, Amazon and Meta.

The blue-chip Dow index rose more than 12 percent this year, while the tech-heavy Nasdaq index gained more than 31 percent.

The S&P 500 is up more than 60 percent in the past two years, following a disastrous 2022 in which it lost as much as 20 percent.

“Inflation is easing, rate cuts are underway and earnings are rising, boosting sentiment and providing valuation support,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.

Many investors believe this growth will continue into 2025, especially with the arrival of a business-friendly Trump administration, which expects lower corporate taxes and looser regulations.

According to Fact setAnalysts expect the S&P 500 to rise by just under 15 percent next year.

The stock market soared on news that Trump had won a second term

Uncertainty about the speed of the Federal Reserve’s interest rate cuts next year is a growing concern for some analysts

Ruchir Sharma, writer and fund manager, said efforts to rein in US debt will ultimately weaken economic growth

However, some economists believe the market is overvalued and see declining returns at the end of this year as a warning sign.

Uncertainty about the speed of the Federal Reserve’s rate cuts next year, and the possibility that benchmark interest costs will remain higher for longer, are raising concerns among some analysts.

“Everyone is expecting a good year next year, and that leaves a lot of room for disappointment,” Callie Cox, chief market strategist at Ritholtz Wealth Management, told CNN.

Veteran fund manager Ruchir Sharma has also said America’s “addiction to government debt” could cause the stock market to collapse next year.

The author and fund manager said efforts to rein in debt – which now stands at a record $36 trillion – will ultimately weaken economic growth.

Sharma, chairman of Rockefeller International who worked at Morgan Stanley for 25 years, made the comments in a column for the Financial times.

He had previously said that the US financial market has become “the mother of all bubbles” that will soon burst.