Why December 26 is Historically the Best Day to Own Stocks
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| Photo by Arun Kuchibhotla on Unsplash |
While markets often drift into a holiday lull, historical data identifies December 26th as a statistical outlier that savvy investors watch closely. According to Bespoke Investment Group, the trading session immediately following Christmas is historically the most consistently positive day of the year for the S&P 500. Since 1953, the market has been open on this date 39 times and has declined in only six of those instances. Even more remarkably, the index has never fallen more than 0.5% on this day, suggesting a powerful "floor" for equity prices as traders return from the holiday with renewed optimism. This consistency offers a rare signal in a typically volatile environment, though analysts caution against relying solely on seasonal trends for leverage.
This specific session also carries weight as the second day of the legendary "Santa Claus Rally," a seven day trading window covering the final five days of the current year and the first two of the new year. This year, the stakes for this period are historically unprecedented. The Santa Claus Rally has failed to produce positive returns for the past two consecutive years a rarity in market history. Data from Dow Jones Market Data indicates that "Santa" has never failed to show up three years in a row. Consequently, this Friday’s session acts as a critical litmus test a strong performance would not only uphold the December 26th tradition but also signal a reversion to the mean for this broader seasonal indicator.
Current market conditions appear primed to respect this history, with the S&P 500 already tallying fresh intraday records during the abbreviated Christmas Eve session. With the Dow Jones Industrial Average rising 0.6% and the Nasdaq inching higher, the momentum is undeniably bullish heading into the "gift" session. However, investors should view this data through the lens of probability rather than certainty. While the historical win rate of December 26th is compelling, it serves better as a confirmation of existing momentum rather than a standalone investment thesis.