History says last year's weak finish for stocks could be a drag on returns in 2026
TIMOTHY A. CLARY / AFP via Getty Images
- S&P 500 ended 2025 up 16%, but fell 1% in the final five trading days.
- An LPL Financial analysis links weak year-end performance to lower returns in the following year.
- Historical trends do not guarantee future results, and 2026 began with S&P 500 gains.
While the S&P 500 closed out 2025 up 16%, the index ended the year on the wrong foot, posting negative returns during the market's final five trading days.
According to a report from LPL Financial, that could mean stocks are in for a lackluster year ahead.
The firm's analysis showed that — going back to 1950 — when the benchmark index produced negative returns during the last five trading days in a year, average returns in the subsequent January and the entire following year were dampened compared to when stocks rallied in late December. During the last five trading days of 2025, the S&P 500 fell 0.86%.
"When the rally is positive — putting investors on the 'nice' list — the S&P 500 has delivered an average January gain of 1.4% and an impressive 10.4% return for the full year that follows," the report said. "In contrast, when the index was down during this period — the 'naughty' list — the averages dropped to only -0.1% for January and 6.1% for the subsequent year."
LPL
Over the last 75 years, stocks have been negative in the final five days in 17 instances, or 22% of the time.
Still, despite what the data suggests, it's essential to remember that LPL's analysis is purely technical and does not consider fundamental market drivers. And as the saying goes, past performance does not guarantee future results. As LPL points out, the S&P 500 produced negative returns in the last week of the year in both 2023 and 2024, and strong returns followed both years.
"Seasonal trends reflect historical tendencies, not guarantees," the firm said. "They don't account for fundamentals like earnings, monetary and fiscal policy changes, or economic conditions."
On Friday, stocks kicked with both the S&P 500 and Nasdaq 100 in the green.