The Stock Market Just Did Something It Hasn't Done Since 1950 -- and It's Scary

• The Santa Claus rally looks astatine marketplace returns during the past 5 trading days of December and the archetypal 2 of January.

• Historically, the S&P 500 generated affirmative returns during this play astir 80% of the time.

• This year, however, the Santa Claus rally is sending a warning.

• 10 stocks we similar amended than S&P 500 Index ›

The holidays aren't conscionable a clip for radical to celebrate. Holidays are a clip for the markets to celebrate, too.

The "Santa Claus rally," which looks astatine the show of the S&P 500 (SNPINDEX: ^GSPC) implicit the past 5 trading days of December and the archetypal 2 of January, is traditionally considered a bully accidental for investors to seizure gains. From 1950-2025, the S&P 500 has posted affirmative returns 78% of the clip during this period, with an mean summation of 1.3%.

However, the rally ending successful 2026 delivered a warning, not tidings of bully cheer.

For the archetypal clip since astatine slightest 1950, the S&P 500 delivered antagonistic returns during this model for 3 consecutive years. In 2024, the scale was down 0.9%. It fell again successful 2025, posting a nonaccomplishment of 0.3%. This year, it was marginally lower, falling 0.1%.

While it's not a technological measure, the Santa Claus rally has historically signaled however the remainder of the twelvemonth mightiness crook out. In "up" years, the S&P 500 has averaged a 10.4% instrumentality for the afloat calendar year. When it's down, the scale has lone gained an mean of 6.1%.

To beryllium fair, this measurement isn't indicative of what could hap successful immoderate peculiar year. Take the past 2 years, for example. It was down during the rally model successful some cases, but the S&P 500 managed to present full-year gains of 23% and 16%, respectively.

But we've ne'er seen losses successful 3 consecutive years during this window. The information that the scale has produced double-digit returns successful some 2024 and 2025 could mean the U.S. banal marketplace is astatine greater hazard of a deeper-than-average pullback this clip around. We conscionable don't cognize for sure.

That whitethorn beryllium the scariest portion of all.

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