U.S. stocks failed to kick off the new year on an upbeat note after a rough final stretch of 2024.
The S&P 500 index SPX closed 0.2% lower Thursday, the first trading session of 2025. That’s after the index dropped 2.6% in the period running from the U.S. stock market’s close the day before Christmas to the end of 2024, marking “the worst performance for the closing days of the year since at least 1952,” according to a Bespoke Investment Group note emailed Thursday.
“December wasn’t a good month for bulls,” Bespoke said in the note. “And the last several days were bad to a historic degree.”
But such a brutal end to an otherwise strong 2024 for the S&P 500 doesn’t necessarily spell trouble for 2025, with Bespoke finding that the U.S. equities benchmark has tended to climb in the year following a decline of more than 1% during the period between Christmas and year’s end.
January tends to be one of the strongest months for the S&P 500, according to a Thursday note from Renaissance Macro Research. In the chart below, RenMac tracked the index’s average monthly return since 1928.
Meanwhile, investors are watching the window for the so-called Santa Claus rally. That window remains open, with history showing U.S. stocks tend to deliver gains over the seasonal period.
See: Wall Street’s ‘Santa Claus rally’ window is about to open with the Dow down in December
The latest Santa-rally period began Christmas Eve and will run through Friday. The seasonal stretch traditionally includes the last five trading days of the year and the first two of the new year.
After falling 1.6% in the final five trading sessions of 2024, the S&P 500’s stumble left it down 2.5% for December. The Santa rally appeared in jeopardy following Thursday’s retreat.
The U.S. stock market broadly fell Thursday, with the Nasdaq Composite COMP closing down 0.2% and the Dow Jones Industrial Average DJIA dropping 0.4%. The S&P 500 ended 2024 up 23.3% for the year.