Understanding the Santa Claus Rally: What It Is and Its Likelihood This Year
Santa Claus Rally Overview: The Santa Claus rally, defined as the stock market's performance during the last five trading days of the year and the first two of the new year, has historically seen an average gain of 1.3% for the S&P 500 since 1950.
Current Market Conditions: The S&P 500 recently ended a four-day losing streak, buoyed by positive economic indicators and strong demand in the AI sector, although it remains slightly lower for the month.
Market Predictions: Jeffrey Hirsch predicts the S&P 500 could reach 7,100 by year-end, suggesting that while the Santa Claus rally is not dependent on stability in the AI trade, such stability would support the rally.
Warning Signs: If the Santa Claus rally does not materialize, Hirsch advises investors to consider it a warning sign to examine other market indicators, rather than an immediate signal of a bear market.
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