Santa Claus did not come to town this year. At least, as far as Wall Street is concerned. Through Thursday’s close, the S & P 500 is down 1.8% during the so-called Santa Claus rally period — which runs across the last five trading days of one year and the first two of the of the following one. It was the late Yale Hirsch, founder of the Stock Trader’s Almanac in 1968, who originally put some of these jitters in traders’ minds, famously saying: “If Santa Claus should fail to call, bears may come to Broad and Wall.” This latest bout of market weakness contrasts with what was a strong 2024 performance. The S & P 500 rose more than 23% last year, putting its two-year advance at more than 53%. Growth stocks notched their biggest ever two-year outperformance over value stocks, according to Bank of America, with the Russell 1000 Growth Index rising 90% over that time. The Russell 1000 Value Index, meanwhile, gained a little more than 27% over the two-year stretch. The lack of a Santa Claus rally, though, could mean a lackluster performance lies ahead for stocks. “The Santa Claus rally indicator is a ‘no-go’ for this year,” Piper Sandler technical strategist Craig Johnson wrote. “In the 21 occurrences since 1928 when the Santa rally did not happen, the forward returns for the SPX were still mostly positive over the next … 52 weeks, but they were just not as robust as in years when the rally occurred.” Johnson noted the average S & P 500 return one year after a Santa rally didn’t occur was just over 6.5%. In years following a Santa Claus rally, the benchmark index averages a 7.5% return. Investors now will try to regain their footing on Friday after a weak first session of the year. The S & P 500 ended Thursday down 0.2%, putting its loss for the week thus far at 1.7%. Elsewhere on Wall Street on Friday morning , Jefferies upgraded Las Vegas Sands to buy from hold, calling for 38% upside ahead. “The improving macro conditions in Macau will increase the strength of the mass segment consumer, which LVS has significant exposure to, ultimately allowing for incremental growth to its estimates in the near-term,” Jefferies wrote. “Furthermore, the company is focused on upgrading properties within its portfolio while utilizing its sector-leading balance sheet to repurchase shares. The setup in Macau is ideal for LVS to gain market share in a market expected to recover to 2019 levels by 2026.”
‘Santa Claus rally’ fails to materialize. What it means going forward