Historical Performance: More Gift Than GrinchSince 1950, the S&P 500 has posted positive returns during this seven-day window about 79% of the time, with an average gain of 1.3%. That's significantly better than the typical seven-day return of 0.3% (positive 58% of the time). However, it's not foolproof—2024 bucked the trend with a -2.4% drop in December overall, marking a rare "reverse Santa" where the index fell every trading day from Christmas to New Year's.For broader context:Full December: Historically the strongest month for stocks, averaging +1.5% since 1950.
Post-Rally Indicator: A failed Santa rally often signals a weak January (and sometimes the full year), as per Hirsch's adage: "If Santa should fail to call, bears may come to Broad and Wall." Conversely, a strong one has preceded positive years ~90% of the time when combined with a positive January "trifecta."
Tech Meltdown Friday: Bounce Next Week or More Pain Ahead?
U.S. tech stocks plunged, with AI-related names seeing a broad sell-off as capital rotated into defensive sectors. Weakness in the S&P 500 and Nasdaq was largely driven by a sharp drop in Broadcom, whose shares tumbled 11.4% on the day. Despite beating earnings expectations, investors were disappointed by lower-than-expected AI margins and the lack of AI guidance for fiscal 2026, weighing heavily on the stock. After Friday’s sell-off, will the market stage a strong rebound next week — or continue to slide?
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