Market Perspective: Walking in a Winter Wonderland
Over the last 30 days, we've seen a large price increase in the stock market. This late-year rally of over 10% may have investors wondering if we'll see a so-called Santa Rally this December.
The term "Santa Rally" refers to the tendency for stock prices to rise in the last week of December leading into the first two trading days of January.
Like many cyclical trends, we should note that the Santa Rally is not guaranteed.
Increased holiday spending, investor optimism, and lower trading volumes due to the holiday season has historically influenced end-of-year stock market rallies.
Using market data going back to the 1920, we zoom out:
Decembers are positive 77% of the time. This occurrence is higher than any other month of the year.
Septembers, on the other hand, are positive just 49% of the time, marking it the lowest occurrence of a positive return.
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