The chances of a 'Santa rally' in US stocks just became a lot brighter, with Omicron worries subsiding and the economy looking strong



Santa rallies are a tradition on Wall Street.

Bryan R. Smith is a photographer.

US stocks tend to rise at Christmas. The so-called Santa rally is an established phenomenon.

The Omicron coronaviruses variant looked like it was going to steal Christmas in 2021.

The chances of Kris Kringle coming to Wall Street shot up Wednesday, as studies suggested Omicron is milder than Delta and a raft of strong economic data showed the US economic recovery was on track.

Santa rally has been going on for a long time.

The Santa rally refers to the tendency of stocks to rise over the final five trading days of the year and the first two of the following year.

The S&P 500 has risen on average by 1.3% in these seven days. They've moved higher 79% of the time.

" Whether optimism over a coming new year, holiday spending, traders on vacation, institutions squaring up their books, or the holiday spirit, the bottom line is that bulls tend to believe in Santa," Ryan Detrick, chief market strategist at LPL, said.

Data on the economy and Omicron brings Christmas cheer.

According to studies out of South Africa and Scotland, people with Omicron are less likely to need to go to hospital than people with Delta.

The studies showed that governments would be less likely to impose tough restrictions on growth. The S&P 500 and the DOW Jones both rose.

Markets liked the look of the data. The consumer confidence index rose more than expected in December, with people less worried about inflation.

In a new report,Deutsche Bank lays out a bold forecast on which way stocks will go next year, and names 3 sectors to buy.

The Commerce Department upgraded its data on home sales in November.

The third-quarter US GDP growth estimate is up from the previous one.

Jeffrey Halley, senior market analyst at trading platform Oanda, said in a note that markets and investors will get their Santa/ Christmas rally by the looks of it.

"From here, we are probably going to need some more Omicron headlines along the lines of 'hospitalizations and deaths soar with total cases' to turn the markets from their central bank's 'buy-the-dip in everything' course'," he said.

Yet investors are not sure.

It's not a guarantee that stocks will rally in the final days of the year.

China has locked down 13 million citizens in response to a new coronaviruses outbreak, giving a sense of how the virus might affect the economy. Omicronibility's high transmissibility means it could still swamp hospitals.

The Federal Reserve is set to start hiking interest rates next year, and economists are unsure about the path of inflation.

The tradition of the Santa rally continues, and traders will be hoping they can deal with all that next year.

Business Insider has an original article.