A Santa Claus rally? A Santa Claus rally is the sustained increase in the stock market that occurs around the Christmas holiday on Dec. 25. Most estimate these rallies happen in the week leading up to the Christmas holiday, while others see trends that begin Christmas Day through Jan. 2.12
Theories that explain a Santa Claus rally include end-of-year tax considerations, a general feeling of optimism and seasonal happiness on Wall Street, and investing holiday bonuses. Some institutional investors settle their books and vacation during this time of year, leaving the market to retail investors, who tend to be more bullish toward the market.3
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