The Stock Market Just Did Something It Haven’t Done Since 1950 – and It’s Scary

• The Santa Rally looks at market returns over the last five trading days of December and the first two days of January.

• Historically, the S&P 500 has generated positive returns during this period almost 80% of the time.

• But this year, Santa’s gathering is sounding a warning.

• 10 stocks we like better than the S&P 500 ›

The holidays aren’t just a time to celebrate. The holidays are also a time of celebration for the markets.

THE “Santa Claus Gathering“, which examines the performance of S&P500 (INDEXSNP: ^GSPC) during the last five trading days of December and the first two days of January, is traditionally considered a good opportunity for investors to make gains. From 1950 to 2025, the S&P 500 posted positive returns 78% of the time during this period, with an average gain of 1.3%.

However, the rally that will end in 2026 was a warning and not good news.

For the first time since at least 1950, the S&P500 have generated negative returns during this window for three consecutive years. In 2024, the index was down 0.9%. It fell again in 2025, showing a loss of 0.3%. This year it was slightly lower, down 0.1%.

Although not a scientific measurement, Santa’s gathering has always indicated how the rest of the year might unfold. In “high” years, the S&P 500 returned an average of 10.4% over the entire calendar year. When down, the index has gained an average of only 6.1%.

To be fair, this measurement is not indicative of what might happen in any given year. Take for example the last two years. It was down during the rally window in both cases, but the S&P 500 managed to eke out full-year gains of 23% and 16%, respectively.

But we have never experienced losses in three consecutive years during this window. The fact that the index produced double-digit returns in 2024 and 2025 could mean the U.S. stock market is at greater risk of a larger-than-average decline this time around. We’re just not sure.

This is perhaps the scariest part of all.

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