How Does The Stock Market Perform During Thanksgiving Week?

While many Americans look at Thanksgiving week as a holiday to look forward to, investors have to deal with shortened trading sessions.

Once the market partially reopens on Black Friday, many will move on from November gains or losses. Then, they’ll get ready for the real battle: the holiday season. 

RELATED: 5 Thanksgiving Stocks To Be Thankful About

Thanksgiving Week Offers A Shortened Trading Session

Beginning in 1992, US financial markets close their doors during Thanksgiving. The market then reopens on a shortened trading schedule on the Friday after Thanksgiving. The New York Stock Exchange and Nasdaq will close at 1 p.m. Eastern Time Friday. 

Meanwhile, the Securities Industry and Financial Markets Association closes an hour later.  Against that background, Thanksgiving became synonymous with small trades. This can sometimes generate helter-skelter reactions from the market. 

Thanksgiving Week Showed Modest Gains Since 1945

Analysts at Bespoke Investment Group observed that Thanksgiving week usually generates modest stock gains since 1945. Researchers pointed out that Thanksgiving week usually means an average gain of 0.60 percentage points for the S&P 500.

The best returns happen on the Wednesday before Thanksgiving and Friday after. Declines usually show up on the Monday before Thanksgiving. 

However, Bespoke said that recently, gains are now shifting to Mondays. Nowadays, small declines happen on Tuesday. Then, rallies spark up Wednesdays and Fridays. 

What’s Happening During Thanksgiving Week This Year

This year, the markets during Thanksgiving week are a little optimistic. There are encouraging signs as President Joe Biden ended the guessing game for the Federal Reserve leadership.

Earlier this week, Biden decided to retain Chairman Jerome Powell, whose current term ends February next year, to another four years. 

Last week, the markets closed lower the Friday before Thanksgiving. The S&P 500 posted a decline of 0.14%, while the Nasdaq Composite COMP gained.040%, totaling their weekly gain to 1.2%. Meanwhile, the Dow Jones Industrial Average posted a decline of -0.75%. This is its second week in a row where it ended on a decline. 

Fed Ready To Raise Rates If Inflation Continues to Run High

Meanwhile, Federal Reserve officials remain concerned about rising inflation. During their November meeting, the board expressed its willingness to raise interest rates if prices continue to surge.

In its minutes from its November session, the Fed signaled that it’s ready to dial down its pandemic assistance efforts.

The meeting summary showed a spirited discussion on inflation. Members confirmed the agency’s willingness to act if conditions continue to heat up.

Watch the TRADEPRO Academy video saying that the Thanksgiving shortened week is typically bullish for the stock market:

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Happy Thanksgiving! Do you trade during Thanksgiving week? Or do you find it easier to go on full vacation mode this week and resume your activities the week after Thanksgiving? 

Let us know what you think. Share your thoughts below.