The Stock Market Is on the Verge of Doing Something That No One’s Witnessed Dating Back to Nearly the U.S. Civil War — and It Has Alarming Implications
Sean Williams, The Motley Fool
Sun, July 26, 2026 at 4:26 PM GMT+5:30
7 min read
Despite bouts of heightened volatility on Wall Street, it’s turned into another stellar year for equities. Since early June, the time-tested Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-stock-fueled Nasdaq Composite (NASDAQINDEX: ^IXIC) have all romped to record highs
No single factor is responsible for these gains. Rather, it’s a confluence of catalysts pushing the broader market higher, including (but not limited to):
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Better-than-expected corporate earnings
Record share repurchase activity by S&P 500 companies (in 2025)
Initial public offering (IPO) excitement
Buzz surrounding high-profile stock splits
While the Dow, S&P 500, and Nasdaq Composite have decisively risen over multiple decades, their short-term directional movements are considerably more challenging to predict. This is where historical precedent can come in handy
Although history can’t guarantee what’s to come, certain events have better track records of forecasting the future than others. At present, the stock market is on the verge of doing something that no one has witnessed dating back to nearly the U.S. Civil War — and this event has a, thus far, immaculate track record of foreshadowing trouble for Wall Street
The stock market is on the doorstep of making dubious history
Wall Street’s record books are rewritten from time to time. Just last month, Elon Musk’s Space Exploration Technologies (SpaceX) booted Saudi Aramco from its pedestal and became the largest-ever IPO in Wall Street’s history, raising $85.7 billion, including the underwriters’ overallotment option
But not all records are necessarily desirable for the stock market or investors. While the AI infrastructure build-out is driving investor euphoria on Wall Street, it’s also pushed stock valuations to nearly never-before-seen levels
Before diving in, let’s address the elephant in the room: “value.” Without a one-size-fits-all blueprint for valuing individual companies and/or the broader market, valuations tend to be subjective and potentially driven by investors’ emotions. In other words, what one investor finds pricey might be viewed as a bargain by another
Traditionally, investors rely on the price-to-earnings (P/E) ratio to value companies or the broader market. While the P/E ratio, which accounts for trailing 12-month (TTM) earnings per share (EPS), is a fantastic tool for evaluating mature businesses, it can lose its usefulness during recessions if EPS turns negative
