The spring and summer of 2025 have delivered one of the most dramatic bull runs in the modern history of U.S. equity markets. The S&P 500 index soared by 22% over just twelve weeks, placing this period among the most powerful short-term rallies since 1989. For investors and analysts alike, such an exceptional move naturally raises questions: Is this the beginning of a new bull market, a warning sign of overheating, or merely a recovery phase in a volatile cycle? What does history teach us about the market’s behavior after such explosive rallies—and can those lessons help shape investment decisions in the months and years ahead?

The chart above details the twenty largest 12-week total return gains in the S&P 500 since 1989, including the most recent 2025 surge. Crucially, it doesn’t just document the rallies themselves—it also tracks forward returns over 6 months, 1 year, 2 years, 3 years, 4 years, and 5 years, offering invaluable perspective on what typically follows periods of intense market momentum.

Quantitative Overview: When Do the Biggest Rallies Occur, and What Drives Them?

A look back at history shows that most of the S&P 500’s sharpest rallies have clustered around the end of major crises, periods of risk reassessment, or following sweeping monetary policy changes. The most notable example is the 35.3% gain between March and May 2009, which came just after the global financial crisis bottomed out. Another extraordinary rally unfolded in March–June 2020, as the market rebounded more than 35% in the wake of the COVID-19 pandemic’s initial shock. Other significant periods include late 1998 and early 1999, as markets recovered from the Russian debt default and the LTCM hedge fund collapse, along with a series of technology-fueled rallies in the late 1990s.

In 2025, the context is somewhat different. This 22% rally emerged not from the depths of a severe crisis but from a blend of factors: easing monetary policy expectations, a revival in the technology sector, improving inflation data, robust earnings from major corporations, and a psychological wave of “fear of missing out” (FOMO) driving investors back into equities. Unlike many past surges, today’s market is not climbing out of recession, but pivoting from uncertainty toward renewed optimism.

Historical Parallels: What Happens After a Big Market Surge?

The forward return data provides a powerful reality check. On average, following the twenty largest 12-week S&P 500 rallies, the index has delivered further gains in the ensuing periods. Six months after a rally, the average return was 12.1%, compared to 5.7% for all other periods. After one year, the average post-rally return stood at an impressive 24.2%, versus 11.8% for other times. The trend persists over two and three years, with post-rally periods generally outperforming the baseline.

This pattern reflects the well-documented momentum effect in markets: strong rallies often beget further strength as optimism draws in new capital, sentiment improves, and economic fundamentals continue to support growth. Additionally, post-crisis rallies often represent a “catch-up” effect as valuations and risk appetites revert to historical norms, leading to sustained positive returns.

The Exceptions: Not Every Rally Means More Gains Ahead

Yet, the picture is not uniformly positive. There are important outliers in the historical record. For example, the January–April 1998 rally was followed by a 10% drop in the next six months, and several rallies in the late 1990s and early 2000s resulted in negative returns two or three years out. The infamous dot-com bust stands as a reminder that periods of market exuberance can sometimes be precursors to corrections or even full-blown crashes.

Even so, the long-term data remains largely constructive. Over a five-year horizon, the average total return after a major rally is 48.4%, compared to 39.6% during all other five-year periods. The main exceptions tend to occur when a surge is part of an unsustainable bubble, or when economic fundamentals fail to provide real growth beneath the surface.

Comparing Eras: The 1990s Versus Today

While the late 1990s saw frequent rapid rallies, these did not always translate into lasting bull markets. At times, the market succumbed to sharp corrections driven by monetary policy shifts, geopolitical crises, or earnings disappointments. By contrast, many of the strongest rallies of the past decade—particularly following the 2008–2009 crisis and the COVID-19 shock—led to multi-year uptrends, aided by aggressive central bank interventions, economic recoveries, and steadily rising investor confidence.

The 2025 rally comes amid a unique mix of forces: tech sector dominance, increased participation by retail investors, a surge in algorithmic and quantitative trading, and renewed appetite for U.S. risk assets from global investors. The key question now is whether this run will prove as resilient as previous recoveries, or if it could mark the start of a new, less predictable cycle.

Strategic Analysis: What Should Investors Take Away?

The main takeaway from the historical data is that investors who try to “time” the market by exiting after a sharp rally often miss out on additional upside. On average, markets that have surged strongly tend to continue rising, especially when macroeconomic conditions remain stable and do not indicate the onset of a classic bubble. While there are periods where returns faltered or turned negative after big rallies, most cycles ultimately rewarded those who stayed invested, particularly over multi-year horizons.

For long-term investors, this evidence reinforces the wisdom of maintaining broad diversification and a steady allocation to equities even after substantial gains. History suggests that the best strategy is to resist the temptation to sell simply because the market appears “overbought”—instead, focus on underlying fundamentals, monitor shifts in economic and monetary policy, and avoid chasing speculative momentum without a basis in earnings or real growth.

Conclusion: Is 2025 the Start of a New Bull Market, or a Red Flag?

The S&P 500’s remarkable 22% rally in the spring and summer of 2025 places investors at a fascinating crossroads. On one hand, history shows that strong momentum periods often continue to deliver positive returns in the months and years that follow—particularly when supported by favorable economic data and corporate performance. On the other, it remains essential to approach such rallies with a critical eye, assessing whether the macro backdrop truly supports further gains, and guarding against complacency or euphoric excess.

The chart and data presented here offer valuable guidance for making informed decisions—not to fear continued rallies, but also not to assume that all surges guarantee smooth sailing ahead. While history never repeats itself exactly, it provides a framework for understanding market patterns in times of high volatility and exceptional returns.