The first half of 2026 was a good one for stocks, especially for the Russell 2000 Index (RUT). The small-cap benchmark gained more than 20% for its best first-half return since 1991. Since 1980, it gained over 20% in the first half just four other times. The large-cap S&P 500 Index (SPX) was no slouch as it posted a return of 9.6% through the end of June.
This week, I'll look at what these strong first-half gains have meant historically for the market over the next quarter and rest of the year. I'll also ***** yze historically the best and worst performing individual stocks from the first half to see which ones would have been better to invest in for the second half of the year.
The table below shows the five times that the RUT gained at least 20% in the first half of a year. The last time was 1991 and the index continued its strong performance gaining 7.5% in the third quarter of that year and over 13% for the second half. The other three years, however, weren't so great. The index was down all three times in the second half, including a 26.9% loss in 1987.
This next table summarizes third-quarter returns in years when both the SPX and RUT gained at least 5% during the first-half of the year. The third quarter performance differed dramatically depending on which index led. In years when the RUT beat the SPX in the first half, the environment we're in now, third-quarter returns were weak. The SPX lost 1.5% on average with positive returns half the time. The RUT performed worse, averaging a loss of 2.5% and just three of 10 positive. By contrast, when the SPX beat the RUT in the first half, both indexes tended to have strong third quarters.
On the bright side, the weakness of the third quarter given our current situation has been short-lived. When you look at the returns in the whole second half of the year, the SPX has outperformed compared to other years. It averaged a return of 6.45% and positive 70% of the time. The RUT has tended to underperform it's typical send half return but the average return of 3.3% indicates a strong fourth quarter given the weak third quarter we saw above.
This week, I'll look at what these strong first-half gains have meant historically for the market over the next quarter and rest of the year. I'll also ***** yze historically the best and worst performing individual stocks from the first half to see which ones would have been better to invest in for the second half of the year.
The table below shows the five times that the RUT gained at least 20% in the first half of a year. The last time was 1991 and the index continued its strong performance gaining 7.5% in the third quarter of that year and over 13% for the second half. The other three years, however, weren't so great. The index was down all three times in the second half, including a 26.9% loss in 1987.
This next table summarizes third-quarter returns in years when both the SPX and RUT gained at least 5% during the first-half of the year. The third quarter performance differed dramatically depending on which index led. In years when the RUT beat the SPX in the first half, the environment we're in now, third-quarter returns were weak. The SPX lost 1.5% on average with positive returns half the time. The RUT performed worse, averaging a loss of 2.5% and just three of 10 positive. By contrast, when the SPX beat the RUT in the first half, both indexes tended to have strong third quarters.
On the bright side, the weakness of the third quarter given our current situation has been short-lived. When you look at the returns in the whole second half of the year, the SPX has outperformed compared to other years. It averaged a return of 6.45% and positive 70% of the time. The RUT has tended to underperform it's typical send half return but the average return of 3.3% indicates a strong fourth quarter given the weak third quarter we saw above.
25 days ago
