Santa Claus rallies are common, with the S&P 500 typically rising after one. It’s unclear if this year’s rally is happening yet. The phenomenon could bring good news for investors in 2026, as history shows these rallies often lead to positive stock market performance the following year.

These rallies occur frequently, with nearly 80% happening in the past 50 years. The most significant rally in the 21st century saw a 7.4% increase in the S&P 500. Institutional and retail investor behavior during the holidays plays a role in these market movements.

Investors have seen the S&P 500 rise in 12 of the years following a Santa Claus rally, with gains often exceeding double digits. However, there have been instances where the market declined after a rally. It’s uncertain if a rally will occur this year, with potential economic factors at play.

While Santa Claus rallies can bring positive market performance, it’s essential to consider all investment options. The Motley Fool Stock Advisor team has identified 10 stocks with high potential for growth, offering an alternative to investing in the S&P 500. Their historical returns have outperformed the market significantly.

Considering historical trends, a Santa Claus rally in 2025 could indicate positive market performance in 2026. However, external economic factors could influence this outcome. Investors should stay informed and consider various investment opportunities to maximize their returns.

Read more at Yahoo Finance: What It Could Mean for the Stock Market in 2026