Santa Claus was pretty much a no-show on Wall Street.
As defined by the Stock Trader’s Almanac, the “Santa Claus rally” refers to the S&P 500’s tendency to rise during the last five trading days of a calendar year and the first two trading sessions of the new year.
Since 1950, the Santa rally has boosted the S&P 500 by an average of 1.3% over the seven trading-day range. The benchmark large-cap index
SPX
closed higher 78% of the Santa Claus trading window in the past 75 years, and gained during that time for the past seven years, according to Dow Jones Market Data.
That compares with an average return of 0.2% for the S&P 500 during any seven trading-day range since 1950. The index also closed higher 58% of any seven-day trading window over the same period, according to Dow Jones Market Data.
But this time around, the Santa rally period, which ran from Dec. 22 through Wednesday, Jan. 3, saw the S&P 500 fall 0.9%. That was the worst performance for a Santa-rally period since 2015-2016, snapping a streak of seven positive Santa stretches, according to Dow Jones Market Data.
The Nasdaq Composite
COMP
also dropped over that time span, down 2.5% since Dec. 22 to book its third consecutive negative Santa rally period, while the Dow Jones Industrial Average
DJIA
eked out a modest gain of less than 0.1% over the same period, according to Dow Jones Market Data.
A failure to rally in that stretch is seen by some market analysts as a signal for more rough sledding ahead.
“Years when there was no ‘Santa Claus rally’ tended to precede bear markets or times when stocks hit significantly lower prices later in the year,” wrote Jeff Hirsch, editor of the Stock Trader’s Almanac & Almanac Investor Newsletter.
U.S. stocks finished lower on Wednesday as most megacap technology stocks fell for a second session to start the new year. Investors appeared to reassess the year-end rally which helped the Nasdaq Composite surge 43% in 2023, while digesting the monetary-policy path in 2024 following the release of the minutes from the Federal Reserve’s last policy meeting.
The S&P 500 was down 0.8%, to end at 4,704 on Wednesday, while the Dow industrials also dropped 0.8%, at 37,430, and the Nasdaq tumbled 1.2%, to finish at 14,592, according to FactSet data.
