The stock market’s remarkable performance in 2024, with the S&P 500 hitting 54 all-time highs, may not be a positive indicator for the future, according to analysts.

What Happened: The S&P 500’s record-breaking run in 2024, fueled by factors such as Fed rate cuts, enthusiasm for artificial intelligence, and Donald Trump’s pro-market policies, has been impressive. However, this trend could be a cause for concern, as historically, years with numerous record highs have been followed by poor stock performance, analysts at Ned Davis Research said in a Monday note.

Historical data since 1928 shows that in years when the S&P 500 hit more than 35 record highs, the median gain for the index the following year was a mere 5.8%, falling short of the long-term average of 8%. In years with at least 50 record highs, the median return was -6% the following year.

“The obvious challenge to momentum studies is that stocks do not go up forever,” strategists said.

“Perhaps AI will drive another productivity and profit boom that will keep inflation and Fed policy benign. History suggests that is the exception rather than the rule.”

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There have been exceptions to this trend, such as in 1996 when the S&P 500 returned 20% despite 77 record highs the previous year. However, these gains were largely attributed to the dot-com productivity boom. “The obvious challenge to momentum studies is that stocks do not go up forever,” the strategists pointed out.

Other technical indicators also suggest a weaker 2025, with the majority of the stock market’s gains being concentrated among a handful of companies.

“Continued narrowing would set the stock market up for a tougher 2025,” the strategists warned.

Why It Matters: Despite this warning, some analysts remain optimistic about the stock market’s future. Bank of America analysts have predicted a positive outlook for stocks in 2025, with the S&P 500 Index expected to reach 6,666 by the end of 2025, marking a 10% increase from current levels. This forecast is based on confidence in productivity gains, resilient corporate earnings, and strategic sector rotation.

Furthermore, Ark Invest’s Cathie Wood has expressed her positive outlook for the stock market under President-elect Donald Trump’s administration. She believes that the market is already starting to anticipate a shift, indicating potential future growth.

Despite a few dips, the equity markets have been trading higher than the pre-election levels after President-elect Trump’s victory.

The Dow Jones recorded a gain of 7.5% for November. The S&P 500, reflected in the SPDR S&P 500 ETF Trust ( SPY ) gained 5.6% last month. The Invesco QQQ Trust, Series 1 ( QQQ ) , which follows the tech-heavy Nasdaq, has posted returns close to 6%.

Meanwhile, the Dow and S&P 500 recorded their best months of the year in November, according to data from Benzinga Pro.

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