Where’s our Santa Claus Rally?
Back in the good old 20th century we regularly had a rally in the stock market in the days leading up to Christmas. During the last decade of the century it became such a regular part of the year end, everyone expected a “Santa Claus” rally.
Every December in the 1990s, with the lonely exception of 1997, the Dow Jones Industrial Average rose during the five trading days before Christmas. In fact, the Dow rose in 13 of the final 14 sessions of 1991, climbing a total of 10.7 percent. It was called “the mother of all Santa Claus rallies.”
Christmas was not so merry for investors 95 years earlier. Because of World War I, the New York Stock Exchange suspended operations in July 1914. It resumed limited trading on Dec. 12. By Dec. 24, 1914, the Dow had fallen to 53.17—its lowest reading since 1907.
Full trading did not resume until April 1915. After the nine-month closure, a new tradition was established. Henceforth, the market would never be closed for more than three days. That is why the stock market holds a half-day session on the day after Thanksgiving.