Stock Market Performance During Thanksgiving: Will the Bull Run Continue?

• Historically, Thanksgiving week has been a bullish period for the S&P 500.
• In presidential election years, the week after Thanksgiving tends to be weaker, but buying the dip often pays off.
• Strong Black Friday sales can boost investor confidence and positively impact retail stocks.

The U.S. stock market will be closed  on Thursday, Nov. 28, for Thanksgiving, and trading will resume on Friday to wrap up a strong November.

But before it does, let’s examine the historical trends that could shape the market’s performance in the coming sessions.

Historic Thanksgiving Performance

Thanksgiving week has historically been bullish. Over the past 50 years , the S&P 500 (SPX) has averaged a 0.6% gain, with 70% of returns positive.

In comparison, other weeks show a smaller average gain of 0.2%, with positive returns only 56% of the time.

By day, Monday has been slightly negative but averages a small gain of 0.2%.

The day before Thanksgiving is historically a strong performer, with Wednesday showing positive returns 76% of the time and an average gain of 0.3%.

Other days typically see less volatility.

Historically, the S&P 500  has risen 60% of the time during Thanksgiving week, with an average return of 0.3% and a median gain of 0.5% since 1928.

In presidential election years, the index has traded up 75% of the time, with an average return of 0.9% and a median gain of 1.1%.

However, the week following Thanksgiving in election years tends to be weaker, with the S&P 500 down 67% of the time, showing an average loss of 1.1% and a median decline of 0.7%.

Despite this, buying during the post-Thanksgiving dip in presidential election years has historically paid off, with the S&P 500 up 75% of the time from Thanksgiving to year-end, showing an average return of 1.4% and a median gain of 1.6%.

According to FactSet data , the S&P 500 has already seen a significant rally in 2024, up by 26% through Monday.

While the median gain for the final week of November is nearly double the historical average for one-week periods since 1945, analysts noted that the median return has typically been in line with the average of 0.2% when the year-to-date gain exceeds 20%.

What Option Traders Should Monitor

Data on SPY options since 2017 shows that SPY often moves more than predicted. Buying a call option on the Friday before Thanksgiving and closing it the following Friday at intrinsic value would have yielded a 53% return per trade.

Buying a put option for the holiday week also averaged a 6% return, with some years seeing huge gains.

A straddle strategy–buying both a call and a put at the money–was the safest bet. The worst outcome was a 10% loss in 2023, and the best was a 100% gain in 2021. Straddles have gained 29% per trade since 2017.

Top performers in the SPX over Thanksgiving week the last decade include personal care stocks Kimberly-Clark (KMB), Clorox (CLX), and Church & Dwight (CHD), which have been positive every year.

How Black Friday Affects Stocks

Black Friday, the day after Thanksgiving in the U.S., is a major retail event that provides insights into consumer spending and investor confidence.

Strong Black Friday sales suggest a profitable shopping season, often reflected in rising retail stock prices. However, disappointing sales can signal reduced consumer spending, causing market reactions.

In 2023, 200.4 million shoppers spent over $966 billion from Thanksgiving through Cyber Monday. Popular items included food, decorations, clothing, and electronics.

Investors use Black Friday sales to gauge the retail sector. Lower sales might indicate slower economic growth. Markets typically see increased trading activity and higher returns before holidays, known as the “holiday effect.”

From 2001 to 2023, the S&P 500’s performance around Thanksgiving was mixed, with positive returns about half the time. The retail sector, however, usually outperforms the broader market during this period.

About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

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