With Christmas just two days away and markets closed tomorrow, many investors are on the watch for a ‘Santa Claus’ rally. In all periods in the post-WWII era, the average S&P 500 performance in the week leading up to Christmas is a gain of 0.5% with positive returns just over two-thirds of the time. The average performance in the week after Christmas is slightly higher at 0.7%, but the consistency of positive returns is the same. This year, the S&P 500 has performed considerably better than its pre-Christmas average gaining 2.25% through midday Thursday.   Since 1945, the S&P 500 has traded up more than 1% in the week leading up to Christmas 23 times (30.3%), and in those prior 23 years, the average week after Christmas performance was actually a bit weaker than normal with an average gain of 0.3% and positive returns just over 60% of the time.  That compares to an average gain of 0.7% in the same week for all years since 1945.

The table below lists each year since 1945 that the S&P 500 was up over 1% in the week leading up to Christmas along with how it performed in the final week of the year.  Of those 23 prior years, there were actually 14 where the S&P 500 rallied 2% or more in the week leading up to Christmas with the last occurrence seven years ago back in 2014.  While those types of gains may have put investors in a good mood for the Christmas holiday, it didn’t leave much powder left for the last week of the year as the median gain was just 0.05% with positive returns half of the time.   Click here to view Bespoke’s premium membership options.