S&P 500 During the Holidays: What to Expect

According to Bank of America (BofA) Global Research, U.S. stocks typically perform well during Thanksgiving week, with even stronger gains observed in presidential election years.

“Seasonality suggests that Thanksgiving week can be a strong week,” said Stephen Suttmeier, BofA’s technical research strategist, in a recent note. Historical data shows that since 1928, the S&P 500 has risen 60% of the time during Thanksgiving week, with an average gain of 0.28% and a median gain of 0.46%. In presidential election years, the index has performed even better, climbing 75% of the time with an average return of 0.88% and a median gain of 1.08%.

While the S&P 500 often experiences a pullback the week after Thanksgiving—particularly in election years, when it has declined 67% of the time with an average loss of 1.12%—Suttmeier notes that these dips historically precede strong year-end rallies. From Thanksgiving through New Year’s Eve, the S&P 500 has posted gains 75% of the time in election years, with an average return of 1.38% and a median gain of 1.60%.

The market’s momentum in 2024 reflects these trends. Year-to-date, the S&P 500 has surged 25.5%, according to FactSet. While historical data from Bespoke Investment Group shows that strong year-to-date gains can temper Thanksgiving week’s returns—bringing them closer to the long-term average—investors may still find opportunities in the anticipated post-holiday rally.

As of Monday, the S&P 500 rose 0.3%, closing at 5,987.37, just shy of its record high of 6,001.35. The Dow Jones Industrial Average climbed 1% to a fresh all-time high, while the Nasdaq Composite added 0.3%. Despite a relatively light economic and earnings calendar this week, key data releases are expected on Wednesday ahead of the Thanksgiving holiday, followed by a shortened trading session on Friday.

Given the market’s historical patterns, the Thanksgiving-to-year-end period remains a promising window for investors to consider.