Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957. The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012. The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012 was about 9.84%. The 5-year annualized return through the end of 2012 was about 1.66%, one of the worst 5-year annualized returns shown on the charts below, although it is an improvement over the -0.25% 5-year annualized return through 2011. The 10-year annualized return through 2012 was about 7.10%, a major improvement over the weak 2.92% returns recorded in the 10-year period ending in 2011.
According to the Wall Street Journal, as of March 1, 2013, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 13.68. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has been around 16 based on data dating back to the 1800s, so the S&P 500 Index may have some room to grow again in 2013 if the economy continued to strengthen. As of March 1, 2013 the S&P 500 Index (including reinvested dividends) is up about 6.86% so far this year.
I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2014.