This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

No 'Santa Claus Rally' for Stocks as December Starts With a Thud

NEW YORK (TheStreet) -- The 'Santa Claus rally' has proved elusive here at the statr of December.

Major U.S. markets have traded for the past five days, setting a dour mood for December, a month that traditionally has been good for stocks. December often gets a boost from the upbeat mood connected with the holidays, gift buying, tax considerations and investing the Christmas bonuses.

But fund managers are split on whether the S&P 500 can continue its run after such a strong year. The index has notched 25.2% year-to-date, and is poised for its best year since 2003 when it recorded a 26.4% gain. That year, stocks rallied more than 5% in December as the index posted its first annual gain in four years after the tech crash.

Fast-forward to 2013 and conditions are very different. The recovery has been in train since 2009 and stock valuations are no longer cheap. In addition, a spate of positive economic data has ironically dampened sentiment by renewing fears the central bank could begin cutting its bond purchases this month. Bond buying by the Federal Reserve has bolstered the relative appeal of equities even as robust earnings growth remains elusive.

Jim Kee, president of South Texas Money Management in San Antonio, says December could be a negative one for markets.

"Markets have risen at three times their average annual rate and looking at technical charts, we expect a pullback," he said in a phone interview. "Strong [economic] data is also bringing forward the case for tapering." Kee, who is also chief economist, helps oversee more than $2 billion in funds under management.

Others are still optimistic. Palisade Capital Management chief investment officer Dan Veru expects this month to add to annual share gains.

"Economic data suggests higher earnings and that will support higher stock prices," the New Jersey based manager said in a phone interview. "We're just in a transitory phrase where investors are nervous about what it could mean when we enter a period of tapering. But data is not improving so much that it would warrant a rapid reversal of stimulus."

Veru helps oversee $4.5 billion in funds under management.

--By Jane Searle in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.66 -0.09%
FB $118.58 0.85%
GOOG $698.30 0.76%
TSLA $241.82 0.44%
YHOO $36.53 -0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs