Stocks have been getting pummeled lately but they could recover some of those losses over the next month, if market history is any indication.
Dow Jones Industrial Average, S&P 500, Nasdaq 100 and Russell 2000 indexes all typically climb between Thanksgiving and Christmas Eve, according to data from Kensho. The Dow has averaged a gain of 1.93 percent in that time period since 1990, while the S&P 500 and Nasdaq gain 1.77 and 1.66 percent, respectively. The Russell has outperformed during the holidays, rising on average 2.46 percent.
“I think we should get a decent rally,” Ralph Acampora, director of technical research at Altaira Capital Partners, told CNBC’s “Squawk on the Street” on Monday. “We’re in the seasonal period [for] the year-end rally, but we have to see new highs for me to get happier.”
The S&P 500 was positive between Thanksgiving and Christmas 78 percent of the time since 1990, according to Kensho.
Investors could use gains like these right now. Wall Street has been dealing with worries of interest rates rising too fast, corporate earnings growth slowing along with the global economy. This has led the major indexes to trade at or in correction territory, down around 10 percent from their 52-week highs.
Equities have also been struggling recently as Facebook, Amazon, Apple, Netflix and Alphabet — which make up the popular “FAANG” trade have entered bear-market territory. Shares of the five companies are down at least 20 percent from their 52-week highs.
But Jason Pride, chief investment officer at Glenmede, thinks this pullback is a “healthy re-pricing of risks at this late-stage of the expansion,” adding that a recession is still unlikely for next year.
UnitedHealth Group, Home Depot and United Technologies are typically the best performers in the Dow at year-end. Kensho data show these stocks average a gain of 5.5 percent, 4.6 percent and 3.9 percent, respectively, between Thanksgiving day and Dec. 24 since 1990. Nike and J.P. Morgan Chase also average returns of greater than 3 percent during those days.
Not every holiday season is good for stocks, however. During the financial crisis, the Dow fell 2.96 percent between Thanksgiving and Christmas Eve. It also fell 1.47 percent during those days in 2015. The S&P 500, Nasdaq and Russell 2000 also fell in 2008 and 2015 during those days.
And if this recent correction is a sign of a bigger economic slowdown, historical evidence of a Santa Claus rally won’t matter.
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