The history of the stock market shows that, most years, there is a "Santa Claus" rally that leaves investors on the right side of the “naughty or nice” list. In 2024, the AI boom helped power stocks to one of their best years in the new millennium but, last week, the Federal Reserve put a damper on the party by drawing a hard line on interest rates and causing indexes to tumble. This has left many investors wondering if some Santa magic can erase the sell-off and put a bow on a great year.
The second half of December is typically the second-strongest period of the year for U.S. equities, according to a recent note from Bank of America. With markets closing on 1 p.m. on Tuesday for Christmas Eve before reopening on Thursday—and shuttering again for New Year’s Day—the holiday period often brings muted trading activity. Still, money often flows into the market, Paul Hickey, cofounder of Bespoke Investment Group, recently told Investopedia, as people invest their bonuses and make trades to minimize taxes.
