After 2 straight misses, this year’s ‘Santa Claus rally’ is off to a solid start. Why it matters for investors.

Core Viewpoint - U.S. stocks have historically never experienced three consecutive negative "Santa Claus rally" periods, suggesting a potential for a market rebound this year after two negative years [1][5]. Group 1: Historical Performance - The Santa rally period, which includes the last five trading sessions of the year and the first two of the following year, began recently, with the S&P 500 up 0.2% since its start [2]. - Since 1950, the S&P 500 has averaged a gain of nearly 1.3% during the Santa rally period, closing higher 76% of the time, while the Dow Jones Industrial Average and Nasdaq Composite have recorded average gains of over 1.3% and 1.7%, respectively [3][4]. Group 2: Market Sentiment and Expectations - Investors are closely monitoring the market for signs of a Santa rally this year, especially given the lack of major catalysts and thin holiday trading [5]. - Historical patterns indicate that the stakes for a rally this year are particularly high, as stocks have posted negative returns in the last two Santa rally periods [5][6]. - Market strategists note that when the Santa rally occurs, the likelihood of continued positive market performance increases, while its absence may signal potential trouble ahead [8].