Is Santa packing up his sleigh already? We've been keeping a close eye on the S&P 500's performance this year, comparing it to the average of the past decade (check out the chart!). This year's ride has been a rollercoaster, with the index showing more volatility than usual. Since early August, it's actually outpaced the average by roughly five percentage points. So, the big question is: did the famous Santa Claus rally arrive early this year, and is it already over?
Over the last 10 years, the Santa rally has typically added about four percentage points to the S&P 500's average annual gains during November and December. But here's where it gets interesting...
The future of this rally hinges on how investors view the credit markets. Last week, just before Halloween, the markets got a scare. Zions Bancorp announced a $50 million charge-off in Q3 due to legal issues with two borrowers. This news sent stock prices tumbling on Thursday, with the KBW Regional Banking ETF taking a particularly hard hit (see the chart).
Could this be a sign of deeper issues, or just a temporary blip? What do you think? Share your thoughts in the comments below!
