- Markets are entering a seasonally strong period with historical trends favoring bullish outcomes.
- Rate cut expectations and strong earnings are fueling optimism across asset classes.
- Key markets, including equities, oil, and Bitcoin, are primed for potential gains.
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Thanksgiving week often casts a spell on markets, delivering a seasonal pattern that investors find hard to ignore. With a strong historical track record and other overlapping trends, this period offers opportunities worth exploring. Let’s break it down.
Thanksgiving week, celebrated on the fourth Thursday of November, has historically been a bullish one for equities. Since 2000, the S&P 500 has shown the following daily averages during the week: Monday gains of +0.53%, a slight dip of -0.09% on Tuesday, +0.34% on Wednesday, and +0.08% on Friday. Zooming out to data since 1945, the index boasts an average weekly return of +0.60%.
But the magic doesn’t stop there. Combine Thanksgiving week’s gains with the Santa Claus rally—a pattern spanning the last five trading days of the year and the first two of the next—and you have a “super seasonal pattern.” From the Tuesday before Thanksgiving to the second trading day in January, the S&P 500 has averaged a +2.58% gain since 1950. Smaller stocks, measured by the Russell 2000, fare even better, rising +3.34% over the same period.
Earnings Strength and Rate Cut Bets Fuel Momentum
Strong earnings and expectations of rate cuts are keeping the markets buoyant. With 90% of S&P 500 companies having reported Q3 earnings, 75% exceeded expectations, delivering average year-over-year growth of +8.5%—more than double market forecasts. Meanwhile, traders see a 58% chance of the Fed cutting rates by 25 basis points at its December meeting, with the ECB fully expected to follow suit on December 12.
3 Markets to Watch That Are on Fire
1. The Dollar
The US dollar is on a tear, chalking up eight consecutive weeks of gains, its longest winning streak this year. It’s up 2.5% in November, adding to October’s near-3% surge. This rally has weighed on emerging market assets, as a stronger greenback makes dollar-denominated commodities more expensive for other currencies. The euro has also taken a beating, falling over -4% since the U.S. elections, with parity against the dollar looming as a possibility.
2. Oil
Oil prices are climbing, heading for their largest weekly gain since early October. Escalating tensions between Russia and Ukraine have added a geopolitical risk premium of $3-$4 per barrel. However, the outlook remains clouded by persistent oversupply concerns for 2025, alongside sluggish demand from China as it grapples with economic challenges. OPEC’s upcoming decision on production quotas is also in sharp focus.
3. Bitcoin
Bitcoin continues its meteoric rise, breaking past $99,000 this week amid optimism over favorable U.S. crypto policies under President-elect Donald Trump. His administration is considering creating a White House position dedicated to digital asset policy, a move that could further boost the sector. Additionally, the resignation of SEC Chairman Gary Gensler—an outspoken crypto critic—adds to the bullish sentiment.
Conclusion
As Thanksgiving ushers in a seasonally strong period for markets, these trends and catalysts could set the tone for a strong finish to the year. Investor sentiment adds another layer of optimism, with the AAII survey showing bullish sentiment at 41.3%, comfortably above its historical average of 37.5%. Meanwhile, bearish sentiment remains at 33.2%, reflecting a market still weighing potential risks but leaning toward optimism.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.