Understanding the Santa Claus Rally: What It Is and Its Likelihood This Year

Written by Emily J. Thompson, Senior Investment Analyst

Source: CNBC

Updated: Dec 19 2025

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Source: CNBC

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.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.