Stocks stage big comeback in best Thanksgiving week since 2008. What comes next?

^GSPC +0.54% ^DJI +0.61%

Stocks blessed investors with a rebound during the shortened Thanksgiving week of trading.

After a rocky month, the S&P 500 SPX and Dow Jones Industrial Average DJIA rose by 3.7% and 3.2%, respectively, in last week through Friday. For the S&P 500, this was the best performance during the holiday week since 2008.

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Investors hoping to see more record highs before the new year should feel encouraged. Since 1950, when the S&P 500 has risen 2% or more during Thanksgiving week, the index continued to climb in December more than 80% of the time, according to Dow Jones Market Data.

Year

Thanksgiving Week

December % Change

1950

2.3%

4.6%

1954

3.3%

5.1%

1957

2.1%

-4.1%

1962

2.3%

1.3%

1963

5.2%

2.4%

1970

2.6%

5.5%

1981

2.8%

-3.0%

1998

2.5%

5.6%

2003

2.2%

5.1%

2008

12.0%

0.8%

2012

3.6%

0.7%

2020

2.3%

3.7%

Average

2.3%

Median

3.1%

% Higher

83.3%

Source: Dow Jones Market Data; FactSet

December has historically been a strong month for stocks, said Joseph Shaposhnik, founder and portfolio manager of the Rainwater Equity ETF RW.

Many attributed the market’s good fortune this week to shifting expectations about an interest-rate cut in December. CME Group data showed futures traders were pricing in a roughly 87% chance of a cut on Friday.

“‘Better late than never’ turned out to be the stock market’s story for November,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, in comments shared with MarketWatch. “While it might be too soon to say we’ve seen the last of tech volatility, over the past five trading days the S&P 500 erased its November pullback, rallying from a nearly 10-week low to less than 1% below its record close.”

But rates weren’t the only thing sending stocks on a roller-coaster ride in November.

“This month was predominantly driven by doubts about AI,” Shaposhnik said.

Even Nvidia’s earnings weren’t convincing enough to boost the market, although Alphabet Inc. shares GOOGL saw a big boost after Google unveiled Gemini 3, which some analysts say is now the best large language model available.

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That has caused the AI trade to splinter into two camps. Michael O’Rourke, chief market strategist at Jones Trading, explained that shares of Alphabet, Broadcom Inc. AVGO and other suppliers that work with the two companies have surged over the past couple of weeks, while shares of companies associated with OpenAI — like Nvidia Corp. NVDA — have lagged behind.

“We can’t declare everyone a winner here,” O’Rourke told MarketWatch.

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The Nasdaq Composite COMP fell 1.5% in November, snapping a seven-month winning streak and logging its biggest monthly drop since March. The small-cap Russell 2000 RUT gained 5.5% this week, for its best weekly showing since November2024. It also rose for a seventh-straight month.

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