(Original title: Wall Street is looking forward to receiving gifts from Santa Claus, but can US stocks really rebound?)
News from the Financial Associated Press, December 24 (edited by Ma Lan)This weekend, Europe and the United States entered the Christmas holiday mode. In addition to the children, there is another group of people who are also looking forward to the arrival of Santa Claus, that is, Wall Street investors.
The S&P 500 has fallen about 6% so far this month, while the S&P 500 has fallen nearly 20% for the year and is on track for its worst annual performance since 2008.
Investors are anticipating an impending Santa Claus rally to rescue U.S. stocks. From a historical point of view, if Santa Claus really appears on Wall Street, the end of this year and the beginning of next year may be full of surprises for US stocks.
santa bounce
December is usually a strong month for U.S. stocks. According to CFRA Research, U.S. stocks have a 75% chance of rising in the last five trading days of December and the first two trading days of January.
According to data from Stock Trader’s Almanac, since 1969, the S&P 500 index has increased by an average of 1.3% with the addition of “Santa Claus rally”.
Media reports also pointed out that if there is no Christmas rebound in 2021, the annual increase of the S&P 500 will be about 4.1%. But gains extended to 10.9 percent, helped by a rally in Santa Claus. In addition, if the Santa Claus rally does not occur, the S&P 500 will fall by an average of 0.3% in the following January, but after the Christmas rally, the index will rise by 1.3%.
Keith Lerner, co-chief investment officer at Truist Advisory Services, said that if Santa Claus does not come, it usually means that there is something in the market that is causing confusion, or that the U.S. stock market rebound is facing obstacles. Negative emotions will not change because of the new year.
Exception year?
December this year may be one of the exceptions.
Investors continued to sell stocks at a record pace in the week ended Wednesday, netting $41.9 billion in net sales, according to a BofA Global Research report on Friday. It attributed the sell-off to tax loss write-off, a strategy that involves selling assets at a loss to offset capital gains taxes.
Strategists at DataTrek said that there is no Santa Claus rally this year, but a coal sell-off, which also seems to make 2023 full of unease.
An important reason for the stock market to rise is whether the economic data has improved, but there will be almost no economic data released next week, which also means that the US stock market cannot find a solid driving force to support the rise.
CFRA Chief Investment Officer Sam Stovall said that if investors start to see a faster pace of inflation slowdown and the Fed stops raising interest rates in the first quarter of next year, we may see a rebound in U.S. stocks and a strong rise next year.
Unfortunately, there is no such signal now.