Wall Street Turns Jolly Heading Into Christmas: S&P 500 Notches New Record As Santa Claus Rally Begins

• The Santa Claus rally, which refers to the stock market's tendency to rise during the final five trading days in December and the first two trading days of the new year, is now underway.
• Ryan Detrick, Chief Market Strategist at Carson Group, stated in his latest note that the Santa Claus rally is more likely than not to take place this year.
• Analysts at Schwab noted that investors will gauge the“durability” of a modest Santa Claus rally, with the strong Q3 GDP print on their minds.

The S & P 500 index hit a fresh all-time high on Wednesday, kicking off the Santa Claus rally a day after scoring a record high following a better-than-expected third-quarter (Q3) GDP print.

All three major indexes, the Dow Jones Industrial Average, the S & P 500, and the Nasdaq Composite, were in the green at the time of writing.

Santa Claus Rally Begins

The Santa Claus rally, which refers to the stock market's tendency to rise during the final five trading days in December and the first two trading days of the new year, is now underway.

The seven-day period begins on Wednesday and runs through January 5.

Ryan Detrick, Chief Market Strategist at Carson Group, stated in his latest note that the Santa Claus rally is more likely than not to take place this year.

“Historically, it turns out these seven days indeed have been quite jolly, as no seven-day combo is more likely to be higher (up 77.3% of the time), and only two combos have a better average return for the S & P 500 than the 1.27% average return during the official Santa Claus Rally period,” he said.

Analysts at Schwab noted that investors will gauge the“durability” of a modest Santa Claus rally, with the strong Q3 GDP print on their minds.

S & P 500 Target

Market experts expect the S & P 500 index to continue to gain in 2026, though the forecast range is wide, with targets ranging from 7,100 to 8,100.

Bank of America Securities' head of U.S. equity and quantitative strategy, Savita Subramanian, believes that the S & P 500 index will end 2026 at 7,100, implying an upside of nearly 2.5% from current levels.

Other firms, such as Citi and Oppenheimer, are more bullish on the S & P 500 index's outlook heading into 2026. While Citi has a target of 7,700, Oppenheimer expects the S & P 500 index to rally nearly 17% to end 2026 at 8,100.

Outlook For 2026 For Risk Assets

Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania's Wharton School of Business, stated on Tuesday that 2026 has the necessary ingredients to be a good year for risk assets.

However, for his prediction to materialize, Siegel stated that Washington will have to avoid self-inflicted disruptions and that productivity continues to hold up.

“One underappreciated tailwind into year-end is productivity: if productivity holds up while nominal demand cools, inflation can fall without the economy needing to break. That's the best possible mix for both equities and longer-duration assets,” he said.

At the time of writing, the SPDR S & P 500 ETF (SPY), which tracks the S & P 500 index, was up 0.28%, the Invesco QQQ Trust ETF (QQQ) gained 0.19%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.52%. Retail sentiment around the S & P 500 ETF on Stocktwits was in the 'bullish' territory.

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