Tomorrow marks the last trading day before the three-day Christmas weekend, and it will also be a shortened session with equity markets closing at 1 PM eastern time. As the last three days of trading have proven, the days leading up to Christmas have historically been good for equities, but what about Christmas Eve or the last trading day before Christmas? The table to the right shows the S&P 500’s performance on the last trading day before Christmas over the last 15 years as well as the average performance of the S&P 500 going all the way back to 1928. As shown, Christmas Eve has traditionally been kind to stocks with the S&P 500 rising an average of 0.32% with positive returns almost three-quarters of the time. More recently, the S&P 500 has still seen positive returns, although the average gain has been slightly less (0.26%) with less consistency of gains (up 60% of the time).
One other thing to note is that the S&P 500 has only seen a move of more than 60bps three times in the last fifteen years. If we translate that to Dow points, that works out to a move of less than 100 points. Therefore, while recent history suggests that there is just a 60% chance of gains on Christmas Eve, there is a much greater likelihood that the DJIA finally breaks its streak of triple-digit moves, which currently stands at nine.