Over the last 100 years, December stock market performance has been the Dow's best.
The blue-chip benchmark has averaged a 1.42% gain in December over the last century, with positive returns 73% of the time.
What's more, "no other month comes close in terms of the consistency of higher prices over the long term," according to Bespoke Investment Group.
Over the last 50 and 20 years, the 30-stock index has averaged solid gains of more than 1.5% in December. Over the last half-century, December has been the second-best month behind April, while it's been the fourth-best month over the last 20 years, data from Bespoke shows.
And this December should meet or exceed that monthly average…
Why to Expect Strong December Stock Market Performance
This December's stock market performance should sweeten an already record-high year for stocks.
All three major benchmarks have logged records and hit milestones on numerous occasions in 2013. With about one month left in the year, the Dow is up 22.76%, the S&P 500 is better by 26.62%, and the Nasdaq has gained a whopping 34.45%.
Several analysts have revised their market projections with the Dow and the S&P already at or above year-end targets.
JPMorgan chief U.S. equity strategist Tom Lee recently upped his end-of-the-year target for the broad-based S&P 500 Index to 1,825, roughly 1.3% higher than where it's trading today.
Lee cited pent-up demand in housing, auto, and construction, which will support upward earnings-per-share revisions; a recovery in the Eurozone region; supportive Fed policies; and sentiment that's upbeat – yet not irrational.
"We continue to believe that the U.S. is in a secular bull market and that remaining constructive on equities is warranted," Lee wrote in a note to clients in late November.
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That's why this year's "Santa Claus rally" is expected to be one of the strongest in years.
Yes, There Really Is a Santa Claus Rally
The term "Santa Claus Rally" was coined thanks to historical data that shows the biggest market jump is typically seen on the last five trading days of the year and the first two of the New Year, around the same time old St. Nick makes his rounds.
This year-end rally is tied to the January Effect. That's when investors typically sell losing positions in December to offset taxable gains before year-end, but buy back those shares in January, spurring a rise in stocks.
In 2012, the Dow only rose 0.6% in December, the S&P ticked up just 0.7%, and the Nasdaq
was nudged up a mere 0.3%. But this year is expected to be much higher.
Money Morning Global Investing & Income Strategist Robert Hsu recently pointed to four factors that will strengthen this year's December stock market performance over previous years; read more here.
- Business Insider:
JPMorgan's Tom Lee Hikes His Year-End S&P 500 Price Target With Six Weeks Left to Go
- CNN Money:
Investors Give Thanks to Their Portfolios
- The Wall Street Journal: