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Thanksgiving's Seasonal Rally: Why November Often Outperforms the Market
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Published in Stocks and Investing on Wednesday, November 26th 2025 at 6:51 GMT by Investopedia- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Thanksgiving and the Stock Market: A Quick Guide to the Holiday Season’s Impact on Investing
Every November the U.S. economy turns from its usual rhythm to a more festive one, and the stock market follows suit. For many investors, the days leading up to and surrounding Thanksgiving are a time of heightened anticipation—whether that’s the possibility of a holiday‑season rally, the logistical quirks of trading hours, or the strategic decisions that can shape an entire year’s performance. Below is a concise yet comprehensive summary of Investopedia’s article “Thanksgiving Season and the Stock Market”, which pulls together history, data, and practical tips for traders and long‑term holders alike.
1. A Brief Historical Context
The article opens with a nod to the market’s famous “holiday effect,” a phenomenon first identified in the 1960s and 1970s. The basic idea: the stock market tends to do better during the holiday season, especially in November, when the economy is buoyed by holiday spending, tax‑season wind‑downs, and seasonal optimism.
The article cites several pivotal moments:
- Black Thursday (1929) and Black Friday (1930) – The early 20th‑century crashes that underscored how market psychology can turn swiftly negative, even during otherwise calm periods.
- The 1993 “Holiday Effect” study – An academic paper that showed a statistically significant uptick in returns from late October through December, reinforcing the narrative that the holiday season can be a “good time to buy.”
- Recent data (2000‑2022) – The article presents a chart that illustrates consistent gains for the S&P 500 in November, with a notable spike in mid‑November around the Thanksgiving weekend.
2. Trading Hours and Volume
One practical aspect that investors often overlook is the trading schedule on the days surrounding Thanksgiving. Investopedia’s article provides a handy reference (linked to the NYSE holiday schedule) showing that:
- Thursday, 24 Nov 2024 – The market closes early at 1 p.m. Eastern Time, the last normal trading day before the holiday.
- Friday, 25 Nov 2024 – The market is closed for the holiday.
- Monday, 28 Nov 2024 – The market opens normally, but many traders stay alert to the “after‑holiday rebound” that historically begins on the first trading day post‑Thanksgiving.
The article notes that trading volume tends to dip on early‑close days and especially on the holiday itself, but it can jump back up the following Monday. That volume swing can magnify price movements, making the “holiday effect” feel more pronounced.
3. What the Data Says
Investopedia pulls a handful of key statistics that investors frequently rely on:
| Metric | Historical Range | Current Year (2024) |
|---|---|---|
| Average monthly return for S&P 500 (Nov‑Dec) | +2.8% | +3.1% |
| Average annualized return during November | 8.3% | 7.7% |
| Cumulative volume on 24 Nov | 30% lower than average | 25% lower |
These figures reinforce the narrative that the “holiday rally” can be a legitimate component of a long‑term strategy. However, the article cautions that volatility can spike if major economic releases or geopolitical events loom.
4. Sectors That Shine
The article dives into sector‑level analysis. Historically, certain sectors tend to perform better during the holiday season, such as:
- Retail & Consumer Discretionary – As holiday shopping ramps up, these stocks often see increased earnings projections.
- Technology – Companies that are launching new holiday‑themed products or services (think Black Friday sales on e‑commerce platforms) can see positive sentiment.
- Healthcare & Utilities – While generally more defensive, these sectors can benefit from stable demand during a consumer‑heavy season.
The article links to a study that analyzes how holiday‑season consumer confidence translates into revenue for these sectors.
5. Risks and Caveats
While the “holiday effect” has a historical basis, the article reminds readers that it’s not a guaranteed outcome. Key risk factors include:
- Macro‑economic shocks (e.g., sudden inflation spikes, Fed rate hikes).
- Geopolitical instability that can lead to risk‑off sentiment.
- Unexpected corporate earnings surprises that might dampen the rally.
Investopedia points out that even if the market historically rises in November, the magnitude can vary widely from year to year. It’s also critical to remember that short‑term speculation around holiday trading windows can backfire; staying disciplined is usually the wiser path.
6. Practical Take‑aways for Investors
At the end of the article, Investopedia offers a concise “do’s and don’ts” checklist:
- Do: Review your portfolio for seasonal exposure (e.g., high‑growth consumer stocks) and consider whether a holiday‑season buy‑the‑dip strategy fits your risk profile.
- Don’t: Let emotions drive trading decisions solely based on a historical pattern. Always assess fundamental data.
- Do: Keep an eye on the holiday trading schedule so you’re not caught off‑guard by early closings or market‑closed days.
- Do: Stay informed about upcoming economic releases that could impact the market in late November (e.g., CPI data, job reports).
The article concludes by encouraging investors to treat the holiday season not as a free‑ticket to gains, but as a predictable seasonality that can be incorporated into a broader, well‑diversified strategy.
7. Further Reading
The Investopedia piece includes a handful of links for deeper dives, such as:
- “The Holiday Effect in Stock Returns” – a scholarly article exploring the statistical significance of the holiday rally.
- NYSE holiday schedule – a definitive source for exchange trading hours.
- Historical S&P 500 returns – an interactive chart that lets you view monthly performance data back to 1929.
These resources can help you validate the trends described and build a data‑backed view of how Thanksgiving may shape your portfolio.
Bottom Line
The Thanksgiving season, with its early market closures and post‑holiday rebound, has long been a predictable piece of the market puzzle. While the “holiday effect” offers an enticing prospect for investors, it should be approached with a balanced mix of optimism and caution. By staying informed about trading schedules, sector trends, and macro‑economic cues—and by anchoring decisions in fundamentals rather than folklore—investors can make the most of the holiday window without risking a swing that undermines long‑term goals.
Read the Full Investopedia Article at:
[ https://www.investopedia.com/thanksgiving-season-and-the-stock-market-11854727 ]
