Is the Santa Claus Rally Broken? Wall Street Braces for Volatile December Amid AI Turbulence
December’s traditional Santa Claus rally—a seasonal surge spanning the last five trading days of the year and the first two of January—faces unprecedented headwinds in 2025. U.S. equities stumbled at the month’s open, European markets wavered, and global risk appetite dimmed. The usual year-end Optimism is colliding with AI-driven volatility and macroeconomic uncertainty, leaving traders questioning whether festive gains will materialize.
Artificial intelligence has emerged as a disruptive force, with rapid sentiment shifts around AI models triggering market turbulence. High-profile stumbles in performance benchmarks and abrupt repricings have amplified volatility, further complicating the liquidity landscape. The result is a December unlike any in recent memory—one where Santa’s rally may be sidelined by algorithmic unpredictability.
