US stocks head into holiday week with history on their side

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It’s a short week for our US readers with markets closed on Thursday followed by a half day of trading on Friday. Crypto markets, of course, will trade through the holiday. But let’s take a look at how US equities typically perform this time of year and what we might see in the coming days. 

Historically, stocks do pretty well during Thanksgiving week. Since 1928, the S&P 500 has finished higher 60% of the time following the holiday. During presidential election years, returns are even more common; the index closes higher 75% of the time, with an average return of 0.88%, according to Bank of America Global Research. 

The Nasdaq Composite, which debuted in 1971, has generally followed suit. Last year, the Nasdaq Composite ended Thanksgiving week 2.4% higher, building off of an already strong month. The Dow Jones Industrial Average and S&P 500 also closed the week ended Black Friday 2023 higher, posting gains of 1.9% and 2.2%, respectively.

Equities were trending higher Tuesday while President-elect Donald Trump’s latest comments on his tariff plans rocked global currency markets. Trump plans to implement 25% tariffs on all imports from Mexico and Canada, plus an additional 10% fee on goods coming from China, he said in a Tuesday Truth Social post. The Canadian dollar and Mexican peso both fell sharply against the dollar. 

Midway through Tuesday’s session, the S&P 500 was up 0.3% since the start of the week while the Nasdaq Composite was virtually flat. 

Stocks were largely insulated from Trump’s comments — likely an indication that investors are going to hold off on making major trades until they have more information about what the Trump Administration might actually do after Inauguration Day. The S&P 500 and Nasdaq Composite indexes were trending 0.4% and 0.5% higher, respectively, over the day at 2 pm ET. 

If the upward trend continues, stocks should end November well into the green. The S&P 500 and Nasdaq Composite indexes are both up close to 5% since the first of the month. 

Tomorrow’s economic reports should move markets, or at least expectations of an interest rate cut from the Fed come December. Initial jobless claims for the week ended Nov. 23 will drop at 8:30 am ET, followed by October’s PCE index at 10 am. Odds of a 25-basis point interest rate cut next month inched higher Tuesday, hitting 59% (compared with 52% a day ago), according to data from CME Group. 

There’s one and a half trading days (plus another hour in today’s session) left in the week. Here’s hoping the rally lasts.

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