It's the holiday season, but the stock market's festivities have been anything but cheerful this week.

At the week’s start traders were buoyed by a record-breaking Nasdaq 100 topping 22,000 and an optimistic outlook on interest rate cuts ahead of the Federal Reserve meeting.

All signs pointed to the Santa Rally – a time Wall Street traditionally celebrates with stocks climbing during the final stretch of the year – making its grand entrance yet again in 2025.

Yet, just as traders were preparing for a festive year-end bull run, the Grinch arrived midweek to throw a wrench in the celebrations.

The Grinch Steals The Show

Wednesday marked a dramatic turn of events as the Federal Reserve's hawkish tone sent shockwaves through the markets.

Chair Jerome Powell delivered a lump of coal to investors by declaring a "new phase" for monetary policy. While the Fed had already cut rates by 100 basis points since September, Powell hinted at a prolonged pause, citing rates moving “meaningfully” closer to neutral territory.

The implications were clear: the days of aggressive cuts are over. Even worse than that, the Grinch didn’t rule out the possibility of a rate hike next year. This unexpected twist sent shivers down traders’ spines, leaving markets rattled.

The CBOE Volatility Index or VIX – Wall Street's so-called fear gauge – spiked over 70% on Wednesday, its sharpest single-day surge since February 2018.

The S&P 500 and Dow Jones Industrial Average recorded their worst daily performances in over two years, while tech stocks sank like a stone in deep water.

Hopes for a Santa Rally seemed to crumble as the Grinch stole the show.

A Christmas Miracle?

Just when it seemed all was lost, Friday brought a glimmer of hope—the kind of plot twist only a Christmas story could deliver.

Fresh inflation data offered an unexpected gift to traders: the Fed's personal consumption expenditure (PCE) price index rose by 2.4% in November, falling short of the anticipated 2.5%. Even more encouraging, the core PCE, which excludes volatile food and energy prices, held steady at 2.8%, undercutting predictions of 2.9%.

This softer-than-expected inflation print was the equivalent to finding a shiny new toy under the tree.

Risk appetite rebounded swiftly, with traders rushing to scoop up the stocks battered during the week's earlier sell-off.

Sentiment brightened, and with it, the Santa Rally narrative began to regain momentum.

The Santa Rally And Its Legacy

The stock market has a long-standing tendency to rally during the last trading days of December.

According to data from Seasonax, the S&P 500 has posted gains during the Dec. 20–Dec. 31 period in 76 out of the past 96 years, averaging a 1.92% return. Over the last eight years, this year-end rally has been remarkably consistent, delivering positive returns each time.

In the past three decades, the S&P 500 has ended the year on a high note in 24 of 30 instances. Even the losses have been relatively mild, with the most recent December downturn occurring in 2022 when the index slipped by 1.8% during the final days.

With six trading days left in 2024, traders may still have time to save the Santa Rally.

10 Stocks To Watch For Year-End Gains

Looking back at 20 years of data, here are 10 standout names within the S&P 500 index that have consistently delivered strong year-end performances:

Stock	Avg. Return	Max Gain	Max Loss	Win Ratio
Freeport-McMoRan Inc (NYSE:FCX)	+3.63%	+14.63%	-13.51%	90%
Illumina, Inc (NASDAQ:ILMN)	+3.62%	+20.76%	-2.56%	80%
Newmont Mining Corporation (NYSE:NEM)	+3.37%	+16.14%	-3.66%	75%
The Mosaic Company (NYSE:MOS)	+3.29%	+13.26%	-5.98%	75%
Global Payments Inc (NYSE:GPN)	+3.06%	+9.31%	-2.12%	75%
CBRE Group, Inc (NYSE:CBRE)	+2.94%	+13.46%	-2.25%	75%
Invesco Ltd (NYSE:IVZ)	+2.80%	+10.23%	-2.83%	70%
ON Semiconductor Corp (NASDAQ:ON)	+2.73%	+11.45%	-3.78%	70%
Mohawk Industries, Inc (NYSE:MHK)	+2.60%	+13.58%	-6.57%	70%
Western Digital Corp (NASDAQ:WDC)	+2.59%	+22.24%	-3.78%	65%

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