Topline
Tuesday marks the start of a historically merry period for investors, a phase commonly known as the “Santa Claus rally” as stock markets typically produce positive returns during the holiday season, potentially bringing further gains for a largely merry 2024 for stocks.
Santa Claus visits the New York Stock Exchange.
AFP via Getty Images
Important facts
The Santa Claus rally refers to the historical tendency for stocks to rise around the Christmas holidays, and the term typically refers to the last five trading days of a year and the first two trading days of the following year.
This means Tuesday is the official start of the Santa Claus rally, which ends on Friday.
According to Dow Jones data, the S&P 500 index has gained an average of 1.3% over the course of the seven-day Santa Claus rally since 1950.
Aside from the cheerfulness among fund managers and other market participants, the phenomenon is due to low trading volume and a lack of potentially damaging economic and earnings reports, although cheerfulness among investors plays a role.
The Santa Claus rally got off to a good start on Tuesday morning, with the S&P rising 0.5% at 10:15 a.m. EDT, breaking above 6,000 for the first time since last Wednesday.
Is the stock market open today?
Yes. The New York Stock Exchange and the Nasdaq will each be open half-day, closing at 1 p.m., while bond markets will close at 2 p.m. and major U.S. financial markets will remain closed until Thursday’s normal trading session.
Important background
Before Santa Claus came down the chimney on Wall Street on Tuesday, it was already a good year for stock investors. The S&P rose more than 25% in 2024, marking its first consecutive annual gain of 20% since 1998, according to FactSet. Much of the gains were driven by continued optimism around generative artificial intelligence and the first interest rate cuts since 2020.
What you should pay attention to
Wall Street strategists widely expect 2025 to be another year of strong returns for investors, with companies like Bank of America, Goldman Sachs and Morgan Stanley each predicting another record rise for the S&P.
tangent
The S&P’s biggest percentage gainer on Tuesday was none other than Palantir, the AI-heavy government contractor that is the index’s best-performing stock in 2024.
Further reading
