For the first time in years, Wall Street is experiencing a weak Santa Claus rally. The S&P 500 has dropped 1.8% through Thursday’s close, contradicting historical trends and raising concerns about the market’s performance for the rest of the year.
This phenomenon was first identified by Yale Hirsch, founder of the Stock Trader’s Almanac in 1968, who predicted that if Santa Claus failed to bring gifts, bears would come out to play on Wall Street. The latest rally weakness contrasts with a strong 2024 performance, where the S&P 500 rose over 23%.
The lack of a Santa Claus rally has sparked concerns about a potential downturn in stocks. Historically, when the rally did not occur, the forward returns for the S&P 500 were mostly positive but less robust than usual. Piper Sandler technical strategist Craig Johnson notes that investors may see weaker returns next year.
However, other market analysts are still optimistic. Jefferies upgraded Las Vegas Sands to buy, citing improving macro conditions in Macau and potential for incremental growth due to upgrades within the company’s portfolio.
Source: https://www.cnbc.com/2025/01/03/santa-claus-rally-fails-to-materialize-what-it-means-going-forward.html