Stock indexes posted mixed results on Thursday in their first trading session following Christmas, tempering the momentum of the so-called Santa Claus rally.
The Dow Jones Industrial Average added about 29 points, closing 0.1% higher, while the S&P 500 edged down slightly to finish nearly flat. The Nasdaq also declined marginally, slipping 0.1%.
These mixed performances came after two consecutive days of gains, with Wednesday’s rally kicking off the Santa Claus period—a historically bullish stretch comprising the last five trading days of the year and the first two of January. Historically, this period has seen the S&P 500 rise an average of 1.3%.
This year’s rally began robustly on Christmas Eve, with the Dow climbing nearly 400 points and the S&P 500 rising 1.1%, delivering the index’s strongest Christmas Eve performance since 1974.
Traders remain optimistic that the rally will close out the year on a high note and pave the way for continued gains in 2024.
“When Santa delivers a positive Santa Claus Rally return, the S&P 500 has historically generated an average January gain of 1.4% and an annual forward return of 10.4%,” said Adam Turnquist, Chief Technical Strategist at LPL Financial, in a Tuesday note.
However, Turnquist cautioned that if stocks decline during this period, the S&P 500 typically sees flatter performance in January and a more modest forward annual return of 5%.
Elsewhere, the latest labor market data revealed potential challenges ahead. Continuing unemployment claims surged to 1.91 million, the highest level in over three years, signaling increased job market strain. Initial jobless claims for the week came in at 219,000, slightly below consensus estimates of 225,000.
