The December hot streak

For more than 50 years, it's been the S&P's best month. But after the rally, will December stall?

By Alexandra Twin, CNN, December 1, 2003

New York (CNN/Money) - Jingle bells, jingle bells, stock gains on the way, but nothing to write home about, they'll be muted, analysts say.

Since 1950, December has been the best month for the S&P 500 and the second best month for the Dow, according to the Stock Trader's Almanac. Since 1971, when the Nasdaq began trading, December has been its second best month.

In particular, the last five sessions of the year and the first two of January tend to be very strong.

This year, however, it's will be tough for December to end up No. 1 or No. 2. (For the best months for the major indexes this year, see chart.)


"We expect the year to end 2 to 3 percent higher or lower than where it is now," said Douglas Altabef, managing director at Matrix Asset Advisors. "The case for it going down is a massive run of profit taking. The case for it going up is people wanting to get a jump on the January rally."

The case for the market not moving that much either way is that it already has risen so much.

As of Monday's close, year-to-date, the Dow is up 18.7 percent, the Nasdaq is up 49 percent, the S&P 500 is up 21.6 percent and the Russell 2000, which measures small caps, is up 44.8 percent.

If the first session of December is any indicator, improving economics should provide something of a catalyst. Monday's reports showed that manufacturing is surging and that the holiday shopping season is unlikely to disappoint.

But whether that is enough to jump start a new stage of the rally is up in the air.
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