Turkey week bullish for stocks, history says

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If history is a guide, investors may have another thing to be thankful for this Thanksgiving holiday week: more stock gains.

“Besides the holiday there is a lot to like about the week,” is the way Paul Hickey, co-founder of Bespoke Investment Group puts it.

Indeed, going back to 1945, the Standard & Poor’s 500 stock index has averaged a gain of 0.64% during Thanksgiving week with positive returns two-thirds of the time, according to Bespoke data.

What’s more, stocks have historically continued higher from Thanksgiving week to year-end, with the broad market gauge averaging gains of 1.77% and posting positive returns 70% of the time.

Stocks kicked off the week in record-setting territory, with the S&P 500 up 11.6% for the year and coming off its 45th record close of the year. It closed at 2063.50 Friday. It was up another 4 points, or 0.2% in early Monday trading.

Gains during Thanksgiving week also tend to be greater when the market is up more than 10% heading into the holiday week (which it is this year with the S&P 500 up 11.6% heading into Monday’s trading session.

“In years where the S&P 500 was up 10% heading into Thanksgiving week, the S&P 500 averages a gain of 0.74% with positive returns two-thirds of the time,” says Bespoke. The gains, on average, also continue for the rest of the year, with average gains of 1.91%.

If there’s one caveat to the Turkey Week rally, it is that the S&P 500 has not fared well during the holiday week in the current bull market, which dates to 2009. In fact, the S&P 500’s average return during Thanksgiving week is a decline of 0.37% with positive returns 60% of the time.

The good news? In the current bull market, the market has been up 100% of the time from the end of Thanksgiving week through year-end, sporting average gains of 4%. “The last time the S&P 500 was down from the end of Thanksgiving week through year-end was in 2005,” according to Bespoke.

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