Historical Annual Returns for the S&P 500 Index - Updated Through 2015

2015 was a mediocre year for the U.S. stock market indexes as a strong U.S. Dollar hurt earnings of multi-nationals.  The entire market also wavered under the prospects of a Federal Reserve interest rate hike and China's devaluation of its currency in August.   The total return of the S&P 500 Index was just 1.38%. 

As I have previously mentioned, 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 2015.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2015 was about 10.02%.  The 5-year annualized return through the end of 2015 was about 12.57%.  The 10-year annualized return through 2015 was about 7.30%.

According to the Wall Street Journal, as of January 8, 2015, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 15.75. 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 appears to be slightly undervalued relative to its historical average P/E ratio.