Does the stock market usually drop in December?

Tax-loss harvesting: Investors sell poorly performing stocks in December to realize tax losses that can offset gains elsewhere in their portfolios. The selling depresses stock prices, which then recover in January as the selling pressure eases, thus creating an uptick in prices.

Do stocks usually go down in December?

S&P 500 Seasonal Patterns

Over the last 100 years, the annualized return of the S&P 500 is 10.5% per year. Over the 10 years, March through July, and also November, are even stronger. January has been a bit better, and December is worse.

What is the December effect in the stock market?

Big investors like mutual funds and Foreign Institutional Investors (FIIs) often rebalance their portfolios in December to meet annual performance goals. This rebalancing usually involves buying more stocks, which increases demand and pushes prices higher.

Is December a good month for trading?

December is fine to trade. You're going to see trending like moves all the way up to the Thursday before the holiday week. Big moves that Thursday, Friday starts to die off and by Christmas week the market gets flat. Firms are all on vacation.

What month is most common for a stock crash?

His research draws a direct line between the timing of many of the most devastating financial crises and a centuries-old pattern: Market crashes tend to cluster during the so-called harvest time, spanning August to October.

Will the Stock Market CRASH in September?

Which months are bad for trading?

Believe it or not, September is actually the weakest month of the year for stock performance. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq composite all offer their worst average return during this period, according to Dow Jones data.

How far did the stock market drop in 2008?

From October 6–10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell over 1,874 points, or 18%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%.

Why not trade in December?

Low liquidity

During holidays, fewer traders and investors participate in the market, leading to reduced liquidity. This means fewer long and short orders make it difficult to execute large trades without causing significant price changes. Lower trading volumes can also result in less market depth.

Does the stock market rise in December?

December has historically been a strong month for the Indian stock market, with a 73% probability of positive returns over the past 26 years. This month often delivers optimism driven by portfolio rebalancing, festive season boosts, and active participation by foreign investors.

Is December a slow month for sales?

The best months for retail sales

Traditionally, the best retail sales by month include November and December, largely due to the holiday season. The period from Thanksgiving to New Year's Day witnesses a surge in consumer spending as individuals shop for gifts, decorations, and holiday-related items.

Do stocks go up over Christmas?

A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January., According to the 2019 Stock Trader's Almanac, the stock market has risen 1.3% on average during the 7 trading days in question since both 1950 ...

How did the stock market do in the month of December?

Stock prices drifted lower in December, driven in part by the Federal Reserve's outlook for fewer rate cuts in the year ahead. The S&P 500 fell 2.5% in just its third negative month of the calendar year. The Dow Jones Industrial Average performed even worse, losing 5.3%.

Do stocks usually go up in January?

January has historically been one of the strongest months of the year for US equity returns. The trend is especially noticeable among small-cap stocks. Several theories attempt to explain the phenomenon, through year-end tax-loss harvesting, seasonal liquidity, and investor psychology.

What is the December effect?

First introduced by Yale Hirsch in 1972 in his Stock Traders' Almanac, the Santa Rally, also called the December Effect, describes a market trend where stock prices tend to rise during the last five trading days of December and the first two trading days of January.

What day do stocks drop the most?

Wednesday and Thursday, however, are more likely to see stock prices rise. In a bear market, some say the market is at its most volatile on Monday and Tuesday, when stocks tend to fall the most. In contrast, some say Thursday is a good day for selling because stocks tend to rise.

What stocks rise during Christmas?

Will there be a recession in 2025?

The odds that the economy will slip into a recession are nearly 50-50, and the time of greatest vulnerability will run from late 2025 to early 2026, according to Moody's Analytics chief economist Mark Zandi.

Should I sell during a market drop?

Panic selling when the stock market is going down is more likely to hurt than help your portfolio. Moreover, you're locking in losses. It's important to understand your risk tolerance, your time horizon, and how the market works during downturns.

What is the stock market prediction for 2025?

August 2025 Stock Market Outlook Key Takeaways

Valuations increased faster than the market return but are concentrated in only five stocks. Growth stocks remain at an especially high premium. Small-cap stocks remain very attractively valued but may take a while before they start to work.

Is it bad to trade in December?

December can be a good month for trading, though there's a noticeable decrease in market activity in the second half of the month. Any holiday period naturally leads to a decrease in trading volumes.

What is the weakest month for stocks?

The U.S. market has struggled the most in September

The bar chart shows average monthly S&P 500 performance from January 1928 through July 2025, with September the worst month and July the best month.

Is it better to sell stocks in December or January?

Tax-loss harvesting: Investors sell poorly performing stocks in December to realize tax losses that can offset gains elsewhere in their portfolios. The selling depresses stock prices, which then recover in January as the selling pressure eases, thus creating an uptick in prices.

Do stocks go up in December?

The Santa Claus rally specifically occurs during a seven-day period spanning the last five trading days of December and first two trading days of January, with historical data showing positive returns about four-fifths of the time.

Why do stocks fall in January?

The theory is that after selling some of their stocks at year-end for tax purposes, investors look for buying opportunities in January. (Tax-loss harvesting activity typically picks up between October and December, although it's a year-round tax-mitigation strategy.)

Which month is best to buy stocks?

The Best Month to Buy Stocks

When thinking about the best months to buy stocks, examining historic performance can be helpful. Data showing average monthly returns for the S&P 500 between 1950 and 2023 shows that broadly, November, July, April, and October tend to be the best months to buy.