© Reuters Wall Street eagerly awaits gifts from Santa Claus, but can Wall Street really bounce back?
News from the Financial Associated Press, December 24 (Edited by Ma Lan)This weekend, Europe and the United States entered the mode of the Christmas holidays. In addition to children, there is also another group of people who are eagerly awaiting the arrival of Santa Claus, namely the investors of Wall Street.
The S&P 500 is down about 6% so far this month, while the S&P 500 is down nearly 20% for the year and is on track for its worst annual performance since 2008.
Investors are anticipating an impending Santa rally to bail out US stocks. From a historical point of view, if Santa does indeed appear on Wall Street, the end of this year and the beginning of next year could be full of surprises for US equities.
December’s Santa rally is usually a strong month for US stocks. According to CFRA Research, US stocks have a 75% chance of going higher in the last five trading days of December and the first two trading days of January.
The S&P 500 index has risen an average of 1.3% since 1969 with the addition of the “Santa Gathering,” according to data from the Stock Trader’s Almanac.
Media reports have also pointed out that if there is no Christmas rebound in 2021, the annual increase in the S&P 500 will be around 4.1%. But gains extended to 10.9%, helped by a rally in Santa Claus. Also, if Santa’s rally doesn’t happen, the S&P 500 will drop an average of 0.3% in January, but after the Christmas rally, the index will rise 1.3%.
Keith Lerner, co-chief investment officer at Truist Advisory Services, said if Santa isn’t coming, it usually means there’s something in the market causing confusion or the US stock market’s rebound is facing snags. Negative emotions will not change because of the new year.
Exceptional year? December of this year may be one of the exceptions.
Investors continued to sell shares at a record pace in the week ending Wednesday, earning $41.9 billion in net sales, according to a report from BofA Global Research on Friday. He attributed the sell-off to the write-off of tax losses, a strategy that involves selling loss-making businesses to offset capital gains taxes.
DataTrek strategists said there will be no Santa Claus rally this year, but a coal fire sale, which also seems to make 2023 fraught with discomfort.
An important reason for the stock market to rally is if the economic data has improved, but there will be almost no economic data released next week, which also means that the US stock market can’t find a solid driving force to sustain the rally .
Sam Stovall, chief investment officer at CFRA, said 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 could see stocks rebound US and a sharp increase next year.
Unfortunately, there is no such signal now.
