December is historically a good month for stocks

January 6, 2026

December is historically a good month for stocks with the S&P 500 closing higher more often than any other month.  However, the widely followed index had closed higher for 8 consecutive months, and we have been expecting a period of consolidation.  Early in the month it appeared we might be looking at a period of profit taking as doubts again resurfaced about the massive amount of spending on artificial intelligence (AI).  By the middle of the month, weakness in technology names had sent the S&P 500 down nearly 2%, but a solid quarterly report from chipmaker Micron reignited tech stocks and brought the index back to unchanged for the month.  Christmas week has traditionally been positive for stock performance, and that was the case again this year, but a selloff on the last day of trading for the year erased those gains.  At month end the S&P 500 had lost only 4 points in December, but that was enough to end an 8-month winning streak. However, the widely followed index did end the year with a gain of 16.4%. The tech heavy NASDAQ led the way in 2025 with a gain of 20.4%.  Oil was 20% lower for the year while gold was one of the strongest performers with a gain of 64%.  The rate on the 10-year Treasury declined nearly 9% during the year.

Coming off an 8^th straight month of gains in November we began December with the market moving higher.  A 7% drop in Bitcoin on day 1 followed by a 7% rally the next day rattled traders, but the market stabilized and moved higher towards the end of the week.  Investors are aware of December’s tendency to move higher, so the bias was to the upside, and the S&P 500 ended the first week with a gain of .3%.  The focus during the second week was the Federal Reserve Open Market committee decision on interest rates, and they did lower rates by 25 basis points as expected.  The rotation out of tech began on the 11th when Oracle’s quarterly report created concerns about the company’s financial condition and sent the stock 13% lower.  The following day AI giant Broadcom issued a solid quarterly report, but traders reacted by sending that stock 10% lower.  The S&P 500 ended the week with a loss of .6%. The rotation out of AI related names continued into the following week before Micron’s impressive quarterly report on the 18th reversed the tech stock selling and brought the S&P 500 back to a .1% gain for the week.  Christmas week is generally a good week for stocks with investors in a holiday mood, and this year was no exception. With just a half day of trading on Christmas Eve and many market participants gone on Friday, the importance of the 1.4% gain for the week was unclear.  The last 3 days of the month are part of what is called the Santa Claus rally, but this year Santa did not come to Wall Street and the month ended with the S&P 500 on a 4-day losing streak and its first down month since March.

January has historically been the 3^rd best month for stocks.  It is the only month where every 401k participant, even the wealthiest, contributes to their plan. As a result, it is the month with the largest market inflows which should boost stocks.  Many of us are paid bi-monthly, which means mutual fund companies do not see the massive inflow of funds until late in the month.  As a result, the month isn’t necessarily influenced by the flow of funds in the early going, and just because a mutual fund company receives large deposits doesn’t mean they put the month to work immediately.  Regardless, investors know funds are eventually flooding into the market, and that often leads to a good month.  For several months we have been noting stock valuations are extended and a pullback can come at any point.  We would use a tradeable decline to increase our exposure to equities. Happy New Year!

If you know someone who would be interested in learning more about Greenberg Financial Group or taking advantage of our complementary financial plan, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter@gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.