S&P 500 Rebounds, Erasing December Losses in Pre-Vacation Rally
The S&P 500 worn out its December losses on Tuesday in a pre-holiday rally, buoyed by the seasonal optimism of the “Santa Claus rally” interval. The index climbed 1.1% in a holiday-shortened session, marking its third consecutive day of beneficial properties and reversing losses from final week’s midweek selloff.
Regardless of 2024 being a standout yr for the large-cap benchmark, December has struggled to dwell as much as its fame as a traditionally sturdy month for shares. Jeff deGraaf, chairman and head of technical analysis at Renaissance Macro Analysis, famous in a Tuesday morning briefing that December sometimes delivers a 74% likelihood of constructive returns. Nonetheless, this yr’s efficiency has been teetering towards the 26% outlier until a big rally materializes.
The Santa Claus rally, first recognized by Yale Hirsch of the Inventory Dealer’s Almanac in 1972, refers to a seasonal development the place the S&P 500 tends to rise over the last 5 buying and selling days of the yr and the primary two of the brand new yr. Traditionally, the index has gained a median of 1.3% throughout this seven-day stretch, outperforming the typical seven-day acquire of 0.24%.
Mark Hulbert, a MarketWatch columnist, attributes this phenomenon partly to investor disengagement through the holidays, which has allowed the development to persist regardless of rising consciousness.
Tuesday’s market motion supplied a promising begin to this yr’s Santa Claus rally. The S&P 500 turned its December losses right into a modest 0.2% month-to-date acquire. The Dow Jones Industrial Common rose 0.9%, narrowing its December decline to 4%, whereas the Nasdaq Composite surged 1.3%, pushed by a rebound in tech shares, and secured a 4.2% acquire for the month.
As U.S. markets ready to shut early on Tuesday and stay shut on Wednesday for Christmas, buyers saved a watch on Hirsch’s well-known cautionary phrase: “If Santa Claus ought to fail to name, bears could come to Broad and Wall.” Traditionally, the absence of a Santa rally has usually preceded bear markets or intervals of lackluster efficiency, as seen in years like 2000, 2008, and 2015.
Nonetheless, 2024 has confirmed resilient even within the face of missed seasonal traits. Regardless of December’s challenges, the S&P 500 is on monitor for a stellar 26% annual acquire, with its largest pullback of the yr—a modest 8.5%—occurring between mid-July and early August.
Because the calendar inches nearer to year-end, buyers stay cautiously optimistic, hopeful that the Santa rally will ship its attribute cheer and shut the yr on a robust word.