Will the US Stock Market See a 'Santa Rally'? Markets Closed on Christmas [New York Stock Market Weekly Outlook]

Fed, Less Likely to Lower Rates Next Year

New York Stock Market Plunged Last Week

Attention on Whether Santa Rally Will Appear in the Last Week of December

This week (23rd-27th), the New York Stock Exchange is under scrutiny to see if the Santa Rally will continue.

The Santa Rally refers to the phenomenon where stock prices rise from the last week of December to the first week of the new year. This is due to increased purchases by individual investors driven by year-end consumption and bonuses, as well as reduced trading volume, which can exaggerate the upward trend. In reality, many Wall Street traders and investors are expected to be on holiday, resulting in less trading.

According to stock market information company Stock Trader's Almanac, the S&P 500 index has risen by an average of 1.3% during this period since 1969.

On the 25th (local time), the New York Stock Exchange will be closed for Christmas. The day before Christmas Eve, it will close early at 1 PM.

Last week, the New York Stock Exchange was significantly shaken by the more hawkish-than-expected Federal Reserve (Fed). The Fed cut rates at the last Federal Open Market Committee (FOMC) of the year but indicated that it would lower rates at a slower pace in the future. As a result, all three major indices plummeted.

However, towards the end of the week, the November Personal Consumption Expenditures (PCE) price index, a preferred inflation gauge by the Fed, provided some relief to the market, slightly recovering risk appetite. The U.S. Department of Commerce announced on the 20th (local time) that the headline PCE price index rose 2.4% year-on-year in November. The month-on-month increase was 0.1%. The core PCE price index, excluding energy and food, rose 2.8% year-on-year and 0.1% month-on-month. Both the headline and core index growth rates were 0.1 percentage points below the expert forecasts compiled by Dow Jones.

Wall Street predicts that the market's fluctuations last week could reduce the burden of high points and trigger a Santa Rally.

New York = Shin-Young Park, Correspondent nyusos@hankyung.com