Santa Claus rally to raise rates? – The historical statistics promise investors good things

This year, the Wall Street Santa Rally starts on Boxing Day.

The Santa Claus rally describes the phenomenon where the stock market rises between Christmas and the first trading days of the new year.

There are several definitions for the phenomenon, but often the last three trading days of the year and the first two trading days of the new year are counted.

There is statistical support for the Santa Claus rally. King treasure manager Petri Ukkola has looked at the Santa Claus rally using the above criteria in the US stock market since 1954.

According to him, during the five days at the turn of the year, the S&P 500 index has, over the last more than 70 years, produced about 0.5 percentage points better than all five-day periods have produced on average.

At the end of the Santa Claus rally, the five-day median return has been 0.78 percent, while the median return for all five-day periods has been 0.29 percent.

He says that from the point of view of the Santa Claus rally, it also seems to be important at which point in the week the five-day period at the turn of the year begins.

“This year, the last day of the calendar year is on Tuesday, so Santa starts his Wall Street rally on Boxing Day. Looking ahead, the conditions are historically the second best. Let’s see what happens this time; usually the returns have been good, but there have also been negatives 4/11 times”, Ukkola mentions.

Santa or January rally?

A positive Santa rally has probably been followed by a good stock market year, but this has also been the case after a negative Santa rally.

According to Ukkola’s calculations, since the turn of the year 1954–1955, a positive buck rally has been followed by a positive year 34 times and a negative year 13 times. The average annual return has been 8.25 percent.

If at the end of the bull rally, the S&P 500 has remained in the red, the average return for the year that began was 10.25 percent. 17 times the annual return has been positive and six times negative.

Financial company CFRA Researchin rescuer Sam Stovall says Bloomberg according to, this can be explained by the January barometer. This is a market assumption where there is a connection between stock returns in January and returns at the end of the year.

If the stock market goes up in January, it’s likely to go up on a year-over-year basis as well. Accordingly, at the end of a negative January, stocks are expected to remain in the freezing cold for the rest of the year as well.

According to Ukkola, since World War II, at the end of January, the S&P 500 has been in the positive 49 times, which has been followed by a positive price development at the end of the year 42 times. Once, i.e. in 1947, the return for the entire year has been exactly zero percent.

“With the S&P 500 price index, the return of the calendar year after a positive January averaged 16.24 percent and -2.67 percent after a negative January.”