Constellation in stock markets suggests Santa Claus rally will come

Wall Street's main S&P 500 index has written down around six percent so far in December. 

Wall Street’s main S&P 500 index has written down around six percent so far in December. But the average share gain for December is 1.6 per cent. Only in 18 cases observed since 1950 the rumored Santa Claus rally did not occur.

Wall Street’s worst year

Stocks on Wall Street have had their worst year so far since 2008, when the financial crisis erupted in the United States. Indeed, the S&P 500 index has written down about one-fifth since the start of 2022. In December alone, the decline so far stands at just under six per cent. In the long run, December is one of the best months of the year on average.

What will be the future development?

If at least mediocre history were to be repeated, there will be a massive Santa Claus rally on Wall Street in the final days of this year. Indeed, stocks would have to start rising massively to erase the very bad December developments so far.

In doing so, the statistic gives Santa Claus fairly big chances for this year. In just 18 cases observed since 1950, the rumored rally has not taken place. In three cases out of four, by contrast, stocks grew at the turn of the old and new year with an average yield of 1.3 per cent. Whether this happens this year will indicate the first trading day after the Christmas holidays, which will come on Tuesday 27 December.


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