As traders enter the final trading week of the year, Wall Street is eagerly watching out for the Santa Claus Rally. Going by recent trends, in 2025, the rally seems less like a tech-only celebration and more like a spreading out among sectors.
According to Seasonax, the S&P 500 has gained an average of 0.95% during the final trading week of the year over the past 95 years, posting a positive return 71% of the time. The Dow Jones Industrial Average has an even better record, rising an average of 1.06% over 128 years with a 77% win rate. However, tech-focused benchmarks present a different picture. The Nasdaq 100 has averaged a modest 0.4% gain over the same period and finished higher only 55% of the time.
ETFs In Focus: Tracking The Santa Rotation
Given this context, ETF flows and performance reveal where investors are placing their year-end bets, and that is more than tech.
Roundhill Magnificent Seven ETF (BATS:MAGS) remains a popular choice for those sticking with Big Tech. The fund provides equal-weight exposure to Tesla Inc (NASDAQ:TSLA), Amazon.com, Inc (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Meta Platforms Inc (NASDAQ:META), Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), and it is up about 2% in the past five days. While tech’s seasonal strength has weakened, ongoing interest in AI, backed by strong earnings from Micron Technology Inc (NASDAQ:MU), has kept investors engaged, although with more cautious expectations.
Outside tech, State Street SPDR S&P Metals & Mining ETF (NYSE:XME) is emerging as a notable Santa trade. The fund climbed nearly 7% over the past five days as metal prices surged due to tight supply, strong industrial demand, and safe-haven flows. Gold miners like Newmont Corporation (NYSE:NEM), trading near recent highs, benefit from expectations of Fed rate cuts and ongoing geopolitical uncertainty, making this sector a sensible year-end hedge.
The real economy is also getting its time in the spotlight. U.S. Global Jets ETF (NYSE:JETS) gained about 1% last week, supported by record holiday travel forecasts. Although on Tuesday it is trading 1.4% lower, AAA estimates over 122 million people will travel between Dec 20 and Jan 1, highlighting strong demand that airlines (and their investors) should remain eager to exploit.
Meanwhile, iShares U.S. Aerospace & Defense ETF (BATS:ITA) rose roughly 6% in the last five days, driven by rising global defense spending and increased geopolitical tensions. It appears that investors in defense stocks don’t take holidays.
The takeaway? If the Santa Claus Rally happens in 2025, it’s likely to be broader and more selective than in previous years. ETFs indicate that along with tech, investors are spreading their cheer across metals, travel, and defense, showing that this year, Santa’s sleigh may be fully diversified.
Read Next:
Image: Shutterstock
Recent Comments