A Santa Claus rally is a surge in price of stocks that occurs in the month of December, closer to Christmas but before New Year's Day. The rally is an anticipation of a rise in stock price in January due to an injection of additional funds into the market which is known as the January effect. The rally can also be due to additional trades that must be completed before year end for accounting and tax purposes.
The rally was sparked by the news that the Fed and 5 other Central banks will rescue the system by making it cheaper for banks to borrow money. The holiday season shopping starts off strong with black friday and cyber monday leading with the sales due the deep discounts in products. The rally spreaded overseas causing the Asian markets to soar (Hang Seng +1012.91 - 19002.26; Nikkei 225 +162.77 - 8597.38)
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