2026 has been a year to remember for investors, and it isn’t even Memorial Day yet.
Stat of the day: There has been only one 5% or more pullback for the S&P 500 (^GSPC) this year, Truist chief investment officer Keith Lerner pointed out in a new note (see chart below). Last year saw three such pullbacks in the S&P 500.
The last time the S&P 500 fell by 5% or more this year was during the late-winter/early-spring correction that bottomed out on March 30.
During that period, the benchmark index experienced a peak-to-trough drop of 7.5% as concerns about the Iran conflict intensified.
The S&P 500 has gained 18% from those lows, and the technology sector has rallied 36%.
What’s driving the market action: A combination of a strong corporate earnings season, optimism about AI spending, and a view that the Iran conflict will end soon has powered a hearty level of investor optimism.
Lerner’s historical data suggests the market is poised for more big gains.
Since 1950, there have been 16 other periods in which the market has gained more than 15% over a 30-trading-day span, as it has recently. Over the following month, returns were essentially a “coin toss,” Lerner said, with no clear bias toward gains or losses.
However, in the subsequent 12 months, the market was higher 93% of the time, with average returns in the double digits.
Read more: How to protect your money during turmoil, stock market volatility
The bottom line: No doubt about it, stocks have generally laughed in the face of the bears this year. And believe it to be true: The bears have made valid cases for oil price-driven inflation and for risks posed by a new Fed chair, Kevin Warsh.
Now is a good time to reassess your portfolio to see whether holdings are looking stretched from a valuation standpoint. Nothing goes up in a straight line.
Lerner said, “After a sharp move higher, markets appear due for a reset or consolidation phase to allow fundamentals to catch up. In our view, the bull market continues to deserve the benefit of the doubt. However, following the strong recovery and with geopolitical uncertainty still elevated — particularly as we move deeper into the midterm election cycle — we expect the path forward to become bumpier. We would continue to respect the primary trend and view deeper pullbacks as opportunities.”
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].
