How S&P 500 tends to perform during Thanksgiving week and into New Year's Eve

MW How S&P 500 tends to perform during Thanksgiving week and into New Year's Eve

By Christine Idzelis

'Seasonality suggests that Thanksgiving week can be a strong week,' particularly after presidential elections, according to BofA

U.S. stocks, as measured by the S&P 500, tend to post "solid" returns during Thanksgiving week, with even stronger gains during presidential election years, according to BofA Global Research.

"Seasonality suggests that Thanksgiving week can be a strong week," said Stephen Suttmeier, technical research strategist at BofA, in a note Monday. While the S&P 500 SPX tends to fall the following week, the dip historically precedes a year-end "rip," he said.

Major U.S. stock indexes were mixed Monday, with the S&P 500 kicking off Thanksgiving week about flat in afternoon trade at around 5,967, according to FactSet, at last check. The S&P 500 was trading a bit below its record closing high of 6,001.35, booked on Nov. 11.

The U.S. stock market will be closed Thursday in observance of Thanksgiving, with trade resuming Friday to close out what's shaping up to be a strong November. The S&P 500 has climbed more than 4% this month based on early-afternoon trading Monday, including a rally since Donald Trump won the U.S. presidential election held Nov. 5.

The S&P 500 has risen 60% of the time on an average return of 0.28% and a median gain of 0.46% "for all Thanksgiving weeks going back to 1928," Suttmeier said. During Thanksgiving week in presidential election years, the S&P 500 has traded up 75% of the time on an average 0.88% return and a median gain of 1.08%, his research found.

While the S&P 500 "has shown some 'digestion' with lower returns the week after Thanksgiving," the index's strong performance historically from the national holiday through New Year's Eve suggests investors may want to consider buying the dip, according to the note.

The index "can be even weaker during the week after Thanksgiving in presidential election years," Suttmeier said. "However, strong positive returns from Thanksgiving through New Year's Eve in election years suggests a buy the post-Thanksgiving dip ahead of a year-end rip pattern."

The week after Thanksgiving in presidential election years, the S&P 500 has been down 67% of the time on an average loss of 1.12%, according to Suttmeier. The index's median decline is 0.68% in such stretches, his note shows.

But buying the decline historically seen in the post-Thanksgiving week during presidential election years has tended to pay off, as the S&P 500 has been up 75% of the time from Thanksgiving into year-end, Suttmeier said, citing an average return of 1.38% and a median gain of 1.60%

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The U.S. stock market has already seen a big rally so far in 2024, with the S&P 500 up around 25% on the year as of Monday afternoon, according to FactSet data, at last check.

Although the S&P 500's median gain in the last week of November is historically "nearly twice the average for all one-week periods since 1945," the index's median return has been "more in line with the historical average" of 0.19% when its year-to-date gain has been more than 20% heading into that period, according to a Bespoke Investment Group note emailed Monday.

"The economic and earnings calendars are relatively light this week," said Bespoke. "But Tuesday will be a relatively busy week for earnings, while Wednesday will be a busier day for economic data as government agencies look to get the reports out ahead of what, for many, will be a long weekend."

U.S. stock benchmarks were trading mixed early afternoon Monday, with the S&P 500 down less than 0.1%, the Dow Jones Industrial Average DJIA climbing 0.5% and the Nasdaq Composite COMP dipping 0.1%, according to FactSet data, at last check.

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-Christine Idzelis

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November 25, 2024 13:00 ET (18:00 GMT)

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