"Santa Claus rally" is here! The performance of the US stock market in December tends to be balanced.

As the "Santa Claus rally" kicked off on Tuesday, with a shortened trading day, the S&P 500 index rose by 1.1%, wiping out the losses from December and achieving a third consecutive day of gains, making up for the sharp drop last week. Although 2024 has been a great year for this large-cap benchmark index, the performance in December has been lackluster, facing the danger of breaking its historical status as one of the best months of the year. Jeff deGraaf, Chairman and Head of Technical Research at Renaissance Macro Research, stated in a report on Tuesday before the opening bell, "The S&P 500 has performed well over the past two trading days, trying to unwind oversold conditions, but this rebound lacks momentum." He pointed out that historical data shows a 74% chance of positive returns in December, "but 2024 seems to be the 26% exception, unless there is a strong catalyst." This may be where the "Santa Claus" comes into play. The "Santa Claus rally" starts from the opening on Tuesday and ends on January 3 next year. This phenomenon was first proposed by Yale Hirsch, founder of the Stock Trader's Almanac, in 1972, referring to the seasonal trend of the S&P 500 index often rising in the last five trading days of the year and the first two trading days of the new year. According to the Stock Trader's Almanac and Dow Jones market data, since 1969, the average increase of the S&P 500 in these seven trading days is 1.3%, while the average increase of any seven trading days is only 0.24%. Why does this phenomenon occur? Financial writer Mark Hulbert believes that this may be partly due to investors being less focused on the market during the holiday period. This mindset may allow this pattern to continue, even though most similar seasonal phenomena are often offset by market behavior once widely known. The Santa Claus rally started off well this year. On Tuesday, the cumulative decline in December for the S&P 500 index was reversed to a 0.2% monthly increase. The Dow Jones Industrial Average rose by nearly 400 points, a 0.9% increase, but is still digesting the 4% cumulative decline in December. The Nasdaq Composite Index rose by 1.3%, with a 4.2% increase in December, primarily benefiting from the strong rebound in technology stocks. The stock market closed early on Tuesday, and the U.S. market will be closed for the Christmas holiday on Wednesday, reopening on Thursday morning. Investors will also be watching for the well-known saying by Hirsch: "If Santa Claus doesn't visit, the bears may come to Wall Street." Jeff Hirsch, editor of the Stock Trader's Almanac, pointed out that a missing Santa Claus rally often signals a bear market or a period when stock prices may fall further. According to the Almanac's standards, the years 1994, 2005, and 2015 did not have a Santa Claus rally, followed by lackluster years. In contrast, 2000 and 2008 experienced severe bear markets, and the mild bear market in early 2016 was also related to this.