Santa Claus Rally: What 76 Years of S&P 500 Data Really Show

Short answer: the Santa Claus rally is the tendency of the S&P 500 to rise over seven trading days: the last five sessions of December plus the first two of January. Across 76 holiday seasons from 1950 to 2025, the index rose in that window 58 times (76.3%), with an average gain of 1.25% and a median of 1.21%. An average seven-day stretch in the same period gained just 0.26% and was positive 58% of the time. So the pattern is real in the history books. It has also faded: since 2010 the average Santa window gained only 0.30%, and the last three holiday seasons (2023, 2024 and 2025) all closed lower.

This guide covers where the term comes from, the full verified record and the decade-by-decade breakdown. It also tests the most famous claim attached to it, "if Santa Claus should fail to call, bears may come to Broad and Wall," against what actually happened the next year. Then we look at Bitcoin over the same window and how traders really use the pattern. Every number below was computed by MarketsHQ from Yahoo Finance daily closes for the S&P 500 (^GSPC) and Bitcoin (BTC-USD). The data runs through the October 14, 2026 close.

What is the Santa Claus rally?

The term comes from Yale Hirsch, who founded the Stock Trader's Almanac. In the early 1970s he wrote about a short, very specific window: the last five trading days of the year and the first two trading days of the new year. That is seven sessions in total. The Santa Claus rally is not the whole of December, the "December effect," or the general idea that stocks do well in the fourth quarter. Many articles mix these up. They are different claims with different track records.

The exact definition matters because it changes the numbers. A rally measured from December 1 to December 31 is a month-long return. It picks up Federal Reserve meetings, quadruple witching and mid-month tax-loss selling. Hirsch's window is deliberately narrow. It starts after most of that is done and ends before January's first big data releases. In this article we measure it exactly as Hirsch defined it. We take the close of the sixth-to-last trading day of December as the starting point and the close of the second trading day of January as the end point.

Take the most recent season as a worked example. The last five trading days of 2025 were December 24, 26, 29, 30 and 31. The starting point is therefore the December 23, 2025 close of 6,909.79. The first two trading days of 2026 were January 2 and January 5, and the window ended at the January 5 close of 6,902.05. That is a change of −0.11%, so Santa did not show up, though only just.

Why Hirsch paired it with a warning

The phrase most traders remember is the couplet that goes with it: "If Santa Claus should fail to call, bears may come to Broad and Wall." Broad Street and Wall Street are where the New York Stock Exchange sits. The idea is that a market that cannot rally in one of its seasonally strongest weeks may be signaling deeper trouble. We test that warning with real data further down. The short version is that it has a mixed record, and the last two years were clear misses.

The verified record: 76 years of Santa Claus rallies

Here is the headline data, computed from Yahoo Finance daily S&P 500 closes for every holiday season from December 1950 to January 2026.

Measure (S&P 500, 1950–2025 seasons)	Santa Claus window (7 days)	Any 7-trading-day stretch
Number of observations	76	~19,000
Share positive	76.3% (58 of 76)	58.0%
Average return	+1.25%	+0.26%
Median return	+1.21%	—
Best result	+7.45% (2008–09)	—
Worst result	−4.04% (1999–2000)	—

On average, the Santa window has earned roughly five times what a random seven-day stretch earns. It has also been positive about three times out of four, against a little under six in ten for any seven-day period. Few calendar patterns are that consistent over this many decades. That consistency is why the Santa Claus rally is still on every December market-outlook list.

Two caveats are worth stating right away. First, 76 observations is not a large sample. A difference of a percentage point on average can come from a handful of unusual years. Second, these are price returns on the index. They leave out dividends, trading costs and taxes, and you cannot buy the index itself, only funds that track it. Those details do not change the direction of the result, but they do shrink it.

The best and worst Santa windows

Season	Window start (close)	Window end (close)	Santa return
2008–09 (best)	Dec 23, 2008	Jan 5, 2009	+7.45%
1974–75	Dec 23, 1974	Jan 3, 1975	+7.20%
1973–74	Dec 21, 1973	Jan 3, 1974	+6.69%
2014–15	Dec 23, 2014	Jan 5, 2015	−2.96%
1990–91	Dec 21, 1990	Jan 3, 1991	−2.97%
1999–2000 (worst)	Dec 23, 1999	Jan 4, 2000	−4.04%

Look at when the three biggest Santa rallies happened: late 2008, late 1973 and late 1974. All three came during or right after brutal bear markets. Those are periods when the market is oversold, sentiment is terrible and volatility is high, so any relief rally tends to be large. The biggest Santa rallies did not mean the bear market was over, either. After the 2008–09 window the S&P 500 fell another 8.6% in January 2009 and did not bottom until March 9, 2009. The 1973–74 window was followed by a 29.7% fall over 1974. A big Santa rally in a bear market is closer to a dead cat bounce than an all-clear.

The worst result, −4.04% over the turn of the millennium, came at the very top of the dot-com bubble. The S&P 500 went on to fall 10.1% over 2000, the first year of a three-year bear market. That is the year the "bears may come to Broad and Wall" warning looks best.

Decade by decade: is the Santa Claus rally fading?

An average across 76 years can hide a trend. Breaking the record down by decade shows one.

Decade (season start)	Seasons	Positive	Average Santa return	Worst	Best
1950s	10	9	+2.14%	−0.90%	+3.63%
1960s	10	8	+0.81%	−1.40%	+3.58%
1970s	10	8	+2.62%	−2.20%	+7.20%
1980s	10	8	+1.33%	−1.85%	+4.05%
1990s	10	6	+0.50%	−4.04%	+5.68%
2000s	10	8	+1.61%	−2.51%	+7.45%
2010s	10	8	+0.30%	−2.96%	+2.04%
2020s (so far)	6	3	+0.28%	−0.88%	+1.43%

The win rate has held up quite well. Most decades still show eight positive windows out of ten. The size of the gain has shrunk, though. In the 1950s and 1970s the average Santa window gained more than 2%. In the 2010s and 2020s it has averaged about 0.3%. That is only slightly above the 0.26% you would expect from any seven-day stretch.

Several explanations fit the timing, and none of them can be proven from price data alone:

• Publicity. Once a pattern is printed in every almanac and repeated on financial TV every December, traders try to get in early. That pulls the gains forward into mid-December and leaves less for the official window.
• Cheaper, faster trading. In the 1950s, moving money in and out of stocks was slow and expensive. Small pricing quirks could last for decades. Today, index futures and ETFs trade around the clock at very low cost, so calendar effects get arbitraged faster.
• Changing year-end flows. Retirement contributions, bonus payments and tax-loss harvesting still cluster around year-end. But automated investing now spreads a lot of that money across the year instead of concentrating it in one week.

If you only looked at the 76-year average, you would think the Santa Claus rally is worth about 1.25% a year. If you look at the last 16 seasons, the number is closer to 0.3%. Both are true, and the gap is the main thing to remember about this pattern.

The last 20 holiday seasons

Season	Santa return	Season	Santa return
2006–07	+0.00%	2016–17	+0.43%
2007–08	−2.51%	2017–18	+1.06%
2008–09	+7.45%	2018–19	+1.29%
2009–10	+1.42%	2019–20	+0.34%
2010–11	+1.07%	2020–21	+1.00%
2011–12	+1.86%	2021–22	+1.43%
2012–13	+2.04%	2022–23	+0.80%
2013–14	+0.18%	2023–24	−0.88%
2014–15	−2.96%	2024–25	−0.53%
2015–16	−2.30%	2025–26	−0.11%

The 2006–07 window rounds to 0.00%. It was technically a tiny gain, which is why it counts as positive in the 58-of-76 total. The run from 2016 through 2022 was seven straight positive windows. The three misses since then are the first time since 1950 that the Santa window has failed in three consecutive seasons. That is a notable streak. It is still too short to prove that the effect is gone. Three coin flips in a row can come up tails.

Inside the window: which days do the work?

Split the seven sessions apart and the gains are not evenly spread. Here is the average S&P 500 return and share of up days for each day in the window, 1950–2025, compared with an ordinary trading day.

Day in the Santa window	Average daily return	Share of up days
Day 1 (5th-to-last December session)	+0.20%	63.2%
Day 2 (4th-to-last, often around Christmas Eve)	+0.28%	67.1%
Day 3 (3rd-to-last)	+0.08%	53.9%
Day 4 (2nd-to-last)	+0.15%	60.5%
Day 5 (last trading day of the year)	+0.07%	57.9%
Day 6 (first trading day of January)	+0.15%	50.0%
Day 7 (second trading day of January)	+0.32%	67.1%
Any trading day, 1950–2026	+0.04%	53.1%

Every one of the seven days has averaged more than an ordinary session. The strongest are day 2, which usually falls in the quiet run-up to Christmas, and day 7, the second session of the new year. The weakest are the last day of the year and the first day of January. The first trading day of January has been up exactly half the time, no better than a coin flip. Its average is still positive because the up days have tended to be bigger than the down days.

The pattern makes some sense. The last day of December is when some funds finish rebalancing and some investors complete tax-loss sales, which can weigh on prices. The first day of January brings fresh positioning and new-year money, and the market can be choppy as traders return from holiday. By the second session the new year's inflows are usually under way.

Why might a Santa Claus rally happen?

Nobody has proven a single cause. Researchers and traders usually point to a mix of the following.

1. Thin holiday trading

Many institutional traders take time off between Christmas and New Year's Day, and trading volume drops sharply. With fewer large sellers in the market, it takes less buying to move prices. Thin markets can move sharply in either direction. Historically, the positive drift has won out more often.

2. The end of tax-loss selling

In the United States, investors can sell losing positions before December 31 to offset capital gains for that tax year. That selling tends to cluster in November and early-to-mid December. Once it is mostly done, the downward pressure eases, and stocks that were sold for tax reasons can bounce. This is closely related to the "January effect," the historical tendency of small-company stocks to outperform early in the year.

3. Year-end cash flows

Year-end bonuses, retirement-account contributions and January's fresh contribution limits all bring new money into the market around the turn of the year. Some of that money arrives automatically through payroll and gets invested in index funds within days.

4. Window dressing and positioning

Some fund managers buy recent winners before the year ends so that their year-end holdings reports look good. This is called "window dressing." At the same time, traders who were short or hedged going into the holidays may cover those positions, which adds buying pressure. When short covering gets large, it can turn into a short squeeze, though that rarely happens at the index level.

5. Holiday optimism

Behavioral explanations point to better mood, fewer negative headlines and forward-looking "next year" outlooks from strategists. This is the hardest explanation to measure. It is also the one most likely to weaken once everyone knows about the pattern.

Testing the warning: "If Santa Claus should fail to call…"

This is the part of the folklore that matters most for investors, because it is used as a forecast for the whole next year. We tested it directly. For each season we compared the Santa window result with the S&P 500's price change over the following calendar year, measured from the last December close to the next December close.

Santa window result	Seasons	Following January: average	Following January: up	Following full year: average	Following full year: up
Santa rallied (positive)	58	+1.40%	37 of 58 (64%)	+10.20%	43 of 58 (74%)
Santa failed (zero or negative)	18	+0.03%	9 of 18 (50%)	+6.70%	12 of 17 (71%)

The 2025–26 season is in the "failed" row for January. It is left out of the full-year column because 2026 is not over yet, which is why that column shows 17 years, not 18.

There is a gap. Years that followed a Santa rally gained 10.2% on average, against 6.7% for years after a failed one. January was also weaker after a miss: flat on average and up only half the time. So the warning is not pure superstition. But the key number is the second "up" figure. After 12 of the 17 completed years in which Santa failed to call, the S&P 500 still finished higher. That is 71%, almost the same as the 74% after a successful Santa rally. A failed Santa rally has slightly lowered the odds and the average size of the next year's gain. It has not been a reliable signal that a bear market was coming.

Every year Santa failed to call, and what happened next

Season	Santa return	Next calendar year (S&P 500 price)	Did "bears come to Broad and Wall"?
1955–56	−0.90%	+2.6%	No, but a weak year
1966–67	−1.40%	+20.1%	No
1968–69	−1.16%	−11.4%	Yes
1977–78	−0.30%	+1.1%	No, but flat
1979–80	−2.20%	+25.8%	No
1981–82	−1.85%	+14.8%	No (a bear market ended in August 1982)
1984–85	−0.57%	+26.3%	No
1990–91	−2.97%	+26.3%	No
1992–93	−1.07%	+7.1%	No
1993–94	−0.10%	−1.5%	Mildly
1999–2000	−4.04%	−10.1%	Yes, start of the dot-com bear
2004–05	−1.82%	+3.0%	No, but a weak year
2007–08	−2.51%	−38.5%	Yes, the financial crisis
2014–15	−2.96%	−0.7%	Mildly
2015–16	−2.30%	+9.5%	No (after a sharp January–February sell-off)
2023–24	−0.88%	+23.3%	No
2024–25	−0.53%	+16.4%	No
2025–26	−0.11%	+12.8% so far (to Oct 14, 2026)	Not so far

Two things stand out. First, the warning caught two of the most painful years in modern market history. The failed Santa rallies of 1999–2000 and 2007–08 came right before the dot-com bust and the 2008 crash. That is the reason the couplet survives. People remember the hits. Second, the misses are big. Some of the best years in the table, including 1980, 1985, 1991, 2024 and 2025, followed a failed Santa rally. Anyone who sold because Santa did not show up would have missed gains of 16% to 26% in five separate years.

The 2026 example is still running. The S&P 500 closed 2025 at 6,845.50, and the Santa window ended slightly lower on January 5. By the October 14, 2026 close the index was at 7,718.94, up 12.8% for the year so far. Three months of trading are left, so the final number could still change a lot. But three straight failed Santa rallies have been followed by two strong years and a strong year-to-date, which is a good reminder of how weak the warning is as a standalone signal.

Is the Santa Claus rally statistically real?

It is fair to ask whether a 76% hit rate over 76 years could be luck. A rough check: if each seven-day window simply had the normal 58% chance of being positive, getting 58 or more positive results out of 76 would be unusual. It would happen well under 1% of the time. On that basis the historical pattern is unlikely to be pure chance.

That does not make it a strategy, for three reasons:

• Data mining. Researchers have tested thousands of calendar windows. Some will look impressive by chance alone. The Santa window was named before most of this data existed, which helps its case, but it was not chosen at random.
• Decay. As the decade table shows, the extra return has shrunk to close to nothing in the last 16 years. A pattern that was strong in the past and weak recently is not something to build a trading plan on.
• Size. Even at its historical average, the edge is about 1% over seven days, before costs and taxes. One sharp sell-off or news shock can wipe out several years of average gains.

Does Bitcoin have a Santa Claus rally?

Crypto traders often borrow stock-market seasonality, as they do with "Uptober". Bitcoin trades every day of the year, including weekends and Christmas, so the "last five days of December plus first two of January" becomes a calendar window, not a trading-day window. We applied the same seven-day rule to Yahoo Finance daily BTC-USD closes from 2014 to January 2026.

Season	Bitcoin over the Santa window	Season	Bitcoin over the Santa window
2014–15	−3.9%	2020–21	+21.5%
2015–16	+3.9%	2021–22	−6.8%
2016–17	+12.6%	2022–23	−1.4%
2017–18	−6.9%	2023–24	+5.7%
2018–19	+2.2%	2024–25	+1.1%
2019–20	−3.5%	2025–26	+3.0%

Bitcoin rose in 7 of 12 Santa windows (58%). The average gain was 2.3% and the median 1.7%. But the spread is huge, from −6.9% to +21.5%. The average is driven mostly by the end of 2020, when Bitcoin was in a powerful bull run. With only 12 observations and that much volatility, there is no reliable Santa pattern in Bitcoin. Recent seasons have also gone the opposite way to stocks. Bitcoin rose in the last three Santa windows while the S&P 500 fell in all three.

Bitcoin's version of the warning has not worked either. Its two worst Santa windows, at the end of 2017 and 2021, were followed by deep bear years: the price fell about 74% over 2018 and 64% over 2022. But the end of 2019 was also a negative Santa window, and Bitcoin then rose about 303% in 2020. Bitcoin's year is driven by its own cycle, liquidity conditions and regulation far more than by one week in December. For context, Bitcoin closed at about $81,560 on October 14, 2026.

How traders actually use the Santa Claus rally

Professional traders rarely treat the Santa window as a buy signal on its own. When they use it, it is usually in one of these ways.

As a tie-breaker, not a trigger

A trader who already has a reason to be bullish, such as a trend, a breakout or improving breadth, may see the seasonal tailwind as one more point in favor. A trader with no other reason does not open a position just because it is December 23. A seasonal pattern is background information, much like "Sell in May and Go Away", which shows a real but modest summer gap in our data.

As a reason to be careful about selling into year-end

Some traders use the pattern defensively. If they plan to trim a position, they may wait until early January rather than sell into the historically firm final week. This has to be weighed against tax consequences, which can easily matter more than a 1% seasonal edge.

As a sentiment check

When the market fails to rally in a week that usually brings gains, some traders read it as a sign of hidden selling pressure. That is the logic behind Hirsch's couplet. As the table above shows, it works best when other signals are already flashing. In both 1999 and 2007, valuations were stretched and credit conditions were deteriorating. It has worked poorly when the economy and earnings were improving, as in 2023 and 2024.

What not to do

• Do not use leverage to "trade Santa." A 1% average edge disappears quickly with leverage costs, spreads and a single bad day. Thin holiday liquidity can widen spreads, especially on CFDs and in after-hours trading.
• Do not sell long-term holdings because Santa failed to call. In 12 of 17 completed years, the market rose anyway. Missing a strong year usually costs far more than the warning saved. Our time in the market vs timing the market study shows how expensive it is to miss the best days.
• Do not confuse a Santa rally with a bottom. The two biggest Santa rallies on record, at the end of 2008 and 1974, happened inside bear markets. A strong holiday week in a downtrend can be a bull trap.

A simple checklist for this December

If you want to watch the 2026–27 Santa window with a clear head, here is a sensible process:

1. Mark the dates. In 2026, December 25 falls on a Friday. Based on the usual NYSE holiday calendar, the last five trading days of the year should be December 24, 28, 29, 30 and 31. The window would then start from the December 23 close and end on the second trading day of January 2027. Check the official exchange calendar, as holiday hours can change.
2. Know the trend going in. Is the S&P 500 above or below its 200-day moving average? Has it been making new highs or lower lows? Our technical analysis tool shows these levels for major indices.
3. Watch what happened before the window. A strong first half of December often pulls gains forward. A weak one, driven by tax-loss selling or a hawkish Fed meeting, can set up a sharper bounce.
4. Watch breadth and volume, not just the index. A rally led by a few mega-caps on thin volume says less than one where most stocks take part.
5. Size positions as if the pattern does not exist. If the trade only makes sense because of seasonality, it is probably too big.
6. Write down the result and move on. If Santa fails to call, check whether other signals agree before changing a long-term plan. History says most of the time they will not.

Santa Claus rally vs other calendar effects

The Santa Claus rally is one of several seasonal patterns traders talk about. They are often confused, so here is how it fits with the others.

• December effect: the claim that December as a whole is a strong month. It covers about 21 trading days rather than seven, so it includes the Fed's December meeting, options expiration and tax-loss selling.
• January effect: the historical tendency of small-company stocks to outperform large ones in January, usually linked to the end of tax-loss selling. It overlaps with the last two days of the Santa window but is about relative performance, not the direction of the whole market.
• "January barometer": another Hirsch idea, that the direction of the S&P 500 in January predicts the year. It is a separate signal from the Santa window, though the two are often quoted together.
• Quadruple witching: the quarterly expiration of stock and index options and futures, which falls on the third Friday of December. That date is usually just before the Santa window starts, and it can create heavy volume and price swings. See our quadruple witching guide.
• Sell in May / Halloween effect: the six-month seasonal split between November–April and May–October. The Santa window falls inside the historically stronger winter half.

Method and limitations

Being transparent about how these numbers were made matters, so here is exactly what we did:

• Data: Yahoo Finance daily closing prices for the S&P 500 index (^GSPC) from January 3, 1950 to October 14, 2026, and for Bitcoin (BTC-USD) from September 2014 to October 14, 2026. Data was retrieved on October 17, 2026.
• Santa window: from the close of the sixth-to-last trading day in December to the close of the second trading day in January. That captures the price change over the last five December sessions and the first two January sessions. For Bitcoin, which trades every day, the same rule was applied to calendar days.
• Baseline: every overlapping seven-trading-day period for the S&P 500 since 1950.
• Following January: from the last December close to the last January close.
• Following year: from the last December close to the next December's last close. The 2026 figure is year-to-date only.
• What is left out: dividends, fund fees, trading costs, spreads, taxes and currency effects. The S&P 500 itself is an index and cannot be bought directly. Index funds, ETFs, futures and CFDs all track it with small differences.
• Past performance: nothing in this analysis predicts what will happen in December 2026 or January 2027.

Bottom line

The Santa Claus rally is one of the best-documented calendar patterns in the stock market. From 1950 to 2025, the S&P 500 rose in 58 of 76 Santa windows, averaging 1.25% in seven trading days, against about 0.26% for a normal seven-day stretch. But the edge has faded to roughly 0.3% since 2010, the last three seasons all ended lower, and the famous warning has been wrong far more often than it has been right. In 12 of the 17 completed years after Santa failed to call, the market finished higher, often strongly.

Treat the Santa Claus rally as context, not a forecast. It can help you understand why the last week of December often feels calm and firm, and why a weak one gets so much attention. Your real decisions should rest on trend, breadth, valuation and your own time horizon. If you want to follow the setups our analysts are watching into year-end, see our index trading signals. When you are ready to trade, you can open a trading account, but start small, use stop-losses and remember that holiday markets can be thin and jumpy.

This article is for educational purposes only and is not investment advice. Trading stocks, indices, CFDs and cryptocurrencies involves risk, including the loss of your capital. Past seasonal patterns do not guarantee future results.