Market Extra: ’Tis the season: December lived up to its reputation for stock gains in 2017

U.S. stock-market investors looking at their returns over the month of December should be pleased — but they shouldn’t be surprised.

Wall Street has extended one of its most pronounced seasonal patterns by rising over the course of the year’s final month, which is historically the best month of the year for stocks.

According to the WSJ Market Data Group, the Dow Jones Industrial Average, the S&P 500 and the Russell 2000 have all “ended higher in December more than any other month.” The Dow has enjoyed a positive December in 71% of all years going back 120 years, while the S&P has ended up 73% of the time.

Small-capitalization stocks have seen particular strength in the month, historically, as Santa Claus visits the Russell in 87% of Decembers.

Thus far in December, with one trading day left to go before the end of the month, both the Dow DJIA, -0.15% and the S&P SPX, -0.19% are set for better-than-average December returns. The blue-chip average is up 2.3% on a month-to-date basis, outpacing the average December return of 1.41%, which is the highest average of any month for the Dow, historically speaking. The S&P has gained 1.5%, slightly above its own historical gain of 1.41%, which places December second only to July.

December has typically been less good to the Nasdaq Composite Index COMP, -0.35%  , which is up 1.1% thus far this month. Historically, it rises 1.84% over the month, its second-best month behind January (which has an average gain of 2.39%). It ends December in positive territory 59% of the time; the Nasdaq’s best month is November, which it rises over in 68% of the time.

The Russell, however, has underperformed its average, while remaining in positive territory. The Russell RUT, -0.37% is up 0.3% this month, a far cry from its average December return of 3.19%, which is its highest average return for any month historically. Per WSJ Market Data Group, the Russell has outperformed the S&P in 21 of the past 30 Decembers; since the small-cap index’s inception, it has outperformed the S&P in December more often than any other month.

Gains in the month have in part come on the recent passage of a tax-reform plan out of Washington, which will lower statutory corporate tax rates, among other changes seen as providing a tailwind to equities. The energy sector has also been a strong supporter of overall market gains. While it is down 3.4% for 2017, making it one of only two negative sectors on the year, it has gained 6.8% over the past month.

Related: The last time stocks were this quiet was the year the Beatles went on Ed Sullivan

Also: Stock-market volatility isn’t going to come roaring back: Morgan Stanley

If the major U.S. stock indexes close higher for the month — as they will almost certainly will, given the day’s trading activity — that will set or extend some notable records. The Dow is on track for its ninth straight monthly gain, its longest such streak in nearly 59 years. On Thursday, the blue-chip average closed at a record high for the 71st time this year, a record-setting number of records.

The S&P 500 is also on track for its ninth straight positive month, the longest such streak for the benchmark index since April 1983. On a total-return basis, however, the S&P is set for its 14th straight positive month, a record.

Gains have also been strong on a global basis. Global stocks, as measured by the MSCI All-Country World Index, haven’t had a down month since October 2016. If the index ends higher for December — it is up 0.6% for the month currently — that will mark the first time in history that every month in a calendar year has been positive.

Read: Global stocks could make history this month by refusing to fall

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