Santa Claus rally

A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.,^[1][2] According to the 2019 Stock Trader's Almanac, the stock market has risen 1.3% on average during the 7 trading days in question since both 1950 and 1969.^[2][3] Over the 7 trading days in question, stock prices have historically risen 76% of the time, which is far more than the average performance over a 7-day period.

However, in the weeks prior to Christmas, stock prices have not gone up more than at other times of the year.^[4][5]

In 2024-2025, the S&P 500 completed a reverse Santa Claus rally by selling off during every business day between Christmas and New Year’s, a historic first for the index.^{[citation needed]}

The Santa Claus rally was first recorded by Yale Hirsch in his Stock Trader's Almanac in 1972.^[6]

The Dow Jones Industrial Average has performed better in years following holiday seasons in which the Santa Claus rally does not materialize.^[7][3]

Causes

There is no generally accepted explanation for the phenomenon.^[2] The rally is sometimes attributed to the following:

• Increased investor purchases in anticipation of the January effect^[2]
• Lighter volume due to holiday vacations makes it easier to move the market higher^[3]
• A slow down in tax-loss harvesting that depresses prices at the beginning of December^[3]
• Short sellers / pessimistic investors tend to take vacations around the holidays^[2]