Every Christmas, investors pray for the same thing: that Santa Claus will bring them a rise in the stock market, which is known in the investment world as the "Santa Claus rally".
The "Santa Claus rally" refers to the five trading days between the end of the year and the beginning of the new year, during which the US stock market is likely to rise. This year's "Santa Claus rally" window begins tonight, December 24th.
Is Santa Claus coming tonight?
Since the beginning of the year, the US stock market has generally performed strongly, rebounding continuously since its April lows, with the S&P 500 index constantly hitting new highs. Although the US stock market experienced significant volatility in December, in recent days, with Micron Technology... Earnings reports stabilized investor confidence in the AI industry, and US tech stocks regained their upward momentum, with the S&P 500 index hitting a new high again.
Many investment professionals on Wall Street say they expect U.S. stocks to continue rising during the Christmas holidays to end the year smoothly and get off to a good start in 2026.
Louis Navellier, chairman and chief investment officer of Navellier & Associates investment firm, believes that the current state of the US stock market has paved the way for a "Santa Claus rally." He points out that artificial intelligence... Trading concerns are easing, and many sectors of the market are performing strongly.
Navellier stated that small-cap stocks in the U.S. have recently shown strong momentum, with the Russell 2000 index showing the largest gains, indicating that investors' risk appetite is further increasing as they approach the new year.
“Trends are our friend, and 2026 looks set to start strong, with the potential ‘Santa Claus boom’ back on the agenda,” Navelir said.
National Insurance, the largest financial services organization in the United States Nationwide's chief market strategist, Mark Hackett, is also optimistic about a "Santa Claus rally" at the end of the year.
Hackett cautioned investors that market conditions may cool down in early 2026 as the momentum in the U.S. stock market weakens, but he believes there are many positive aspects to the current situation.
“The last two weeks of this year have been the best performing period on the calendar since 1950,” he said. He also noted that since 1928, the market has risen 80% of the time in the last two weeks of each year, with an average increase of 1.6%.
Hackett stated, "When this pattern is widely discussed, it could become a self-fulfilling prophecy."
Bullish on tech stocks
Clark Bellin, president and chief investment officer of investment consulting firm Bellwether Wealth, also believes that the market may still experience some volatility, but the "Santa Claus rally" is just around the corner.
He stated, "Although the market may have appeared volatile in recent weeks, stock prices have generally remained range-bound through the end of December, and a strong seasonal performance at the end of the year may be the catalyst needed for the market to break out of the current narrow trading range."
Belling added that his firm expects further growth in the U.S. tech sector in 2026, and he's not alone in this view. Paul Stanley, chief investment officer at Granite Bay Wealth Management, believes tech stocks are poised for a near-term uptrend.
He pointed out: "Low trading volume and the absence of bad news should allow the Santa Claus rally to continue and maintain a good momentum for the remainder of 2025... Although tech stocks are highly valued, some companies like the 'Big Seven' have actually underperformed the S&P 500 this year, suggesting there is still more room for growth, and not all tech stocks are overvalued or blindly optimistic."
(Article source: CLS)
