As I write this commentary today, Dec 11, 2025, a hopeful question fitting for the holiday season comes to mind: “Will we see a Santa Claus rally this year?”
For those of you who aren’t familiar with the term, a Santa Claus rally refers to the stock market’s historical tendency to rise during the period between Christmas and the first 2 days in January. It doesn’t always happen, but it is a phenomenon that has been observed and is fun to watch. And while certainly not related to anything market related, as a Packer fan (sorry if you’re not) watching my team play December football reminds me of another phenomenon, the “Jordan Love Toyotathon phenomenon”, a popular theory that claims Green Bay Packers QB Jordan Love plays significantly better during Toyota’s annual holiday sales event (mid-Nov to Jan). And yes, you can look that up. In both cases I don’t think anyone can say for certain, and as with anything these days, opinions are always divided. Could I just be experiencing some holiday optimism? Let’s take a look.
While it’s reasonable to feel uplifted and positive during this time of year, I think it’s important to consider current trends in both the market and the economy. Alongside the strong holiday cheer -from year-end bonuses to strong holiday retail sales- the US Stock Market has also performed well this year, with major indices reaching new record highs and delivering double-digit returns. The rate of inflation is also slowing down, although we as consumers have yet to see the actual prices drop, especially groceries; nevertheless, inflation today (3%) is significantly lower compared to its peak in 2022 (9.1%).
This leads to the main news going into this week: will the Fed cut rates? And yes, they did. The Fed cut rates by another quarter-point (0.25%) for the third consecutive time yesterday, Dec. 10th. The markets reacted positively, but I wouldn’t be surprised to see some volatility as investors digest the Fed’s ‘hawkish’ (cautionary) stance, implying future cuts are not guaranteed.
So, as I conclude my last commentary for this year, I’ll go back to my earlier question: Could I just be experiencing some holiday optimism? I’d like to think that given the economic factors and developments this year, that perhaps my (hopeful) anticipation is grounded in more than just seasonal goodwill. And, even if this is simply a bit of holiday optimism, I’m truly hoping for a genuine Santa Claus rally for our clients this year.
