'Santa Rally' Could Cap Banner Year for Stocks

It's been like Christmas almost every day for investors in 2019, but there may yet be more presents underneath the tree. After starting off the year with a surge in January, the Dow Jones Industrial Average and S&P 500 have both seen steady growth throughout the year. Entering December, the Dow was up more than 20% for the year and the S&P up more than 25%, both on track to see their best annual gains since 2013. All of this is a continuation of the longest and largest bull market in history.

Now, analysts are watching for a so-called Santa Claus rally in December to send the markets into even higher record territory. The Santa rally is Wall Street's nickname for the typical strong gains seen in the final trading days of the year and into the first few days of the new year. A strong Santa Claus rally this year could push the Dow and S&P 500 to their best years since the 1990s.

The factors are there for a typical December, according to KTRH Money Man Pat Shinn. "Historically December is a good month, and it may be a little better than usual this year because of what we call fear of missing out," says Shinn. "This is professional money managers...typically they have not had the returns that the markets have enjoyed, so they're playing catch-up in the last couple of weeks to try and make up any kind of gains going into the end of the year."

Of course, the one big potential negative factor is the ongoing trade dispute between the U.S. and China---specifically, new tariffs on Chinese imports set to take effect this month. "Remember, electronics---which is some of the biggies, including Apple---would be subject to tariffs coming up on December 15th," says Shinn.

Because of the overall strong economy combined with the ebb and flow of the trade negotiations, Shinn predicts a steady, but not spectacular 2020. "Right now the outlook is for slow, but positive economic growth, and a Federal Reserve that is on hold," he says.

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