Christmas Eve Trading Is Typically Thin, Positive, and Random

The S&P 500 is sitting near all-time highs with just 4 1/2 trading sessions left in 2025. The market will close at 1 p.m. ET on Christmas Eve. The Christmas Eve session is typically very thin but has been positive 68% of the time, with an average gain of 0.25% since 1928.

With indexes near all-time highs, one interesting statistic to consider is that the S&P 500 has finished at an all-time high on the last day of trading just three times in the last 34 years — 1991, 2013, and 2020. There have been other years when it was close to a high, but it is rare for the closing print to be an absolute high.

The market action on Tuesday was upbeat with big-cap technology driving the indexes, but breadth was poor with small-caps, bitcoin, and speculative stocks lagging. The primary catalyst was the third-quarter GDP, which came in much stronger than expected at 4.3%. Consumer spending increased 3.5% in the third quarter, up from 2.5% in the second quarter. However, inflation picked up slightly with core personal consumption expenditures rising 2.9% vs. 2.6% in the second quarter. That uptick in inflation hurt small-caps and decreased the likelihood of a Fed interest rate cut in January.

My best advice is to be aware that trading will be very thin and random, although there will likely be some pockets of positive action. It is not a good time to build new positions due to inconsistent action, but year-end tax-loss selling and positioning can cause some mispricing.

I’m wary of the market's ability to trend higher next week as we wrap up the year, and am focused on protecting profits and avoiding positions that pull back too much.

If you are heading out early, I’d like to wish you a merry Christmas and happy holidays.

At the time of publication, Rev Shark had no positions in any securities mentioned.