December Usually is a Winner

Since 1980, December has among the highest batting average -- or the winning percentage of positive stock-market performances -- of any month. The S&P 500 rises in December 72% of the time, compared to an average of 62% for all other months. The other top months for stocks are April (73%) and November (72%, including a 9% increase in 2023). On average in December, stocks have risen 1.2%. The best Decembers have been 1991 (up 11.2%), 1987 (up 7.3%), 2010 (up 6.5%), 1999 (up 5.8%) and 1998 (up 5.6%). There also have been clunkers: 1980 (down 3.4%), 1981 (down 3.0%), 1986 (down 2.8%) and 2018 (down 9.2%). Last year, the S&P 500 dropped 5.9% in December. The month usually starts fast, coming off a PCE inflation reading and ahead of the nonfarm payrolls report. The Fed will be meeting in the month and is expected to keep interest rates steady as recent inflation data has trended lower. Many companies will hold investor conferences and provide initial outlooks for 2024. As the second half of the month approaches, volume will tail off and the thinly traded markets could become increasingly volatile. After all, interest rates remain high and the risk of recession is real. Selloffs may present opportunities for generating tax losses or for buying quality stocks that go on sale.