Investing.com — Stocks started the Thanksgiving week on the front foot, continuing a decades-long seasonal trend that could see the Santa rally into year-end kick into higher gear as it comes during a presidential year.
Today, Investing.com asks readers, "Will the Santa Claus rally push stocks higher into year-end?" Have your say in our poll on X.
"Thanksgiving week tends to have solid SPX returns and is even stronger in Presidential election years," analysts from Bank of America said. "The SPX has traded higher 75% of the time on an average return of 0.88% during the week of Thanksgiving in Presidential election years going back to 1928."
The S&P 500 has shown a pattern of strong performance during the Thanksgiving week, with historical data indicating that the index is up 60% of the time with an average return of 0.28% for all Thanksgiving weeks since 1928. This compares favorably to the SPX trading up 56% of the time with an average return of 0.14% for all weeks since 1928.
Bank of America highlighted that while there might be a "post-Thanksgiving dip," this typically precedes a strong rally into year-end. "The Thanksgiving into yearend period shows the SPX up 71% of the time on an average return of 1.46%," they added.
In presidential election years, this pattern is even more pronounced, with the SPX up 75% of the time from Thanksgiving into year-end on an average return of 1.38%. Despite potential weakness in the week following Thanksgiving, history suggests buying opportunities ahead of a "yearend rip."
The analysts flagged specific stocks poised to benefit from this seasonal trend, naming Datadog Inc (NASDAQ:DDOG), EQT Corporation (NYSE:EQT), International Business Machines (NYSE:IBM), and Walt Disney Company (NYSE:DIS) as bulls, while Anheuser Busch Inbev (EBR:ABI) NV ADR (NYSE:BUD) and Vertex Pharmaceuticals Inc (NASDAQ:VRTX) were noted as bears.
The potential for a robust finish to the year for equities, particularly in a presidential election year where historical trends point to ongoing bullish bets through December, the analysts said.
Comments (0)