December is living up to its usual bullish reputation, but this year has been atypical, as the gains happened during the first half of the month. As we noted two weeks ago, since 1950*, the average S&P 500 return in December has been near flat as of December 15, then has sported nice gains for the rest of the month to close up 1.6% on average.
With the S&P 500 up 2.9% as of December 15 this year, can we except to see Santa and his equity gains after a big start to the month? Or do early monthly gains bring the Grinch later in the month? Per Ryan Detrick, Senior Market Strategist, “December usually has seen all of its gains in the second half of the month, after being flat for the first half. So this brings the big question: what happens in a rare year like 2016? It turns out, we can still believe in Santa, as the S&P 500 has been up for the month more than 2.75% only seven other times since 1950, and incredibly, the S&P 500 was higher during the rest of the month all seven times with an average gain the rest of the month of 1.8%. In other words, it will take a lot more than early strength to keep Santa away.”
Here’s another look at the data, but showing the path of the strongest starts to December. Sure enough, they all finish higher, but note that even the pullbacks are modest.
Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.
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*Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
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