What is a 'Santa Claus Rally'

A santa claus rally is a surge in the price of stocks that often occurs in the last week of December through the first two trading days in January. There are numerous explanations for the Santa Claus Rally phenomenon, including tax considerations, happiness around Wall Street, people investing their Christmas bonuses and the fact that the pessimists are usually on vacation this week.

BREAKING DOWN 'Santa Claus Rally'

Many consider the Santa Claus rally to be a result of people buying stocks in anticipation of the rise in stock prices during the month of January, otherwise known as the January effect.

  1. Contingency Clause

    A contract provision that requires a specific event or action ...
  2. Escalator Clause

    An escalator clause is a contract provision allowing for an increase ...
  3. Acceleration Clause

    An acceleration clause is a contract provision that allows a ...
  4. Full Reporting Clause

    A full reporting clause is an insurance provision requiring the ...
  5. Red Clause Letter Of Credit

    A red clause letter of credit is a specialized financing method ...
  6. Honorable Undertaking

    A reinsurance treaty clause indicating that the agreement should ...
Related Articles
  1. Investing

    Why the 'Santa Claus' Stock Rally Is at Risk

    Whether the stock market enjoys a "Santa Claus rally" this year may hinge on the progress of tax reform.
  2. Insights

    The Frosty, Festive World Of Investing

    From Santa Claus rallies to evergreen loans, Wall Street can be a veritable winter wonderland for investors.
  3. Insurance

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  4. Investing

    Corporate Bonds and the Importance of Covenants

    Any type of investor, private or institutional, should be acquainted with the significance of covenants in corporate bond agreements.
  5. Investing

    Selling Coke Across the Pond is Different (KO)

    Coca-Cola put a twist on an ad in Britain. It was not well received.
  6. Personal Finance

    5 Ways to Avoid Overspending at Christmas

    Here are five Christmas shopping tips that can help save you from the Christmas money pit.
  7. Investing

    Amazon Cloud Service Drops Controversial Clause

    AWS got rid of a controversial clause that prevented customers from suing over patent infringement.
  8. Personal Finance

    How To Pay Off Christmas Debt

    Here are some common sense tips for getting over the financial holiday hangover.
  9. Investing

    Why December May Be a Joy for Stock Investors

    Holiday cheer for investors: December tends to be the best month for stocks, with November-January also strong.
  10. Investing

    PTTRX: PIMCO Total Return Fund Performance Case Study

    Discover the performance trends of the PIMCO Total Return Fund, and learn which times of year the fund has performed better and worse than usual.
  1. How is the consumer price index (CPI) used in market escalation contracts?

    Understand the purpose of market escalation contracts and learn how the consumer price index (CPI) is often used to make ... Read Answer >>
  2. Is a waiver of subrogation clause better for a tenant or a landlord?

    Find out why a waiver of subrogation clause is important to include in a lease agreement, and understand how it affects landlords ... Read Answer >>
  3. Are there significant seasonal patterns in the electronics sector?

    Examine the consumer electronics sector and learn what typical seasonal sales patterns can be identified for this important ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  3. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  6. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
Trading Center