Get ready for some holiday cheer on Wall Street as the much-anticipated Santa Claus rally is about to start. According to the Stock Trader’s Almanac, this rally refers to the stock market’s tendency to rise during the last five trading days of the current calendar year and the first two trading sessions of the new year. It’s almost time for Santa to pay us a visit on Wall Street!
If history repeats itself, then we can expect some festive gains in the stock market. The Santa rally has boosted the S&P 500 by an average of 1.3% over the seven trading-day range since 1950. In the past 75 years, the benchmark has closed higher 78% of the time during this rally, and has experienced gains for the past seven years, according to Dow Jones Market Data.
Even though the stock market has already been partying ahead of Christmas, there’s still excitement surrounding the upcoming Santa rally. However, some market watchers believe that Santa’s gifts may have already been delivered with the market showing signs of being a bit extended. Despite the dip in the market earlier this week, the optimism for the Santa rally remains strong.
So, while we can expect some holiday magic on Wall Street, there are also some cautionary notes about the market’s potential for steep drawdowns. It’s not all sugar plums and candy canes in the market, so investors should be prepared for any surprises during this festive season.
