It may be tempting since the Dow Jones Industrial Average eclipsed 18,000 on Tuesday for the first time ever, but don’t take the Santa Claus rally too seriously. Much of the year-end buying in stocks–traditionally called the Santa Claus rally–is the work of hedge funds cleaning up their portfolios to look good for clients. It’s a long-held practice known on the Street as ‘window dressing.’ Even though there is plenty of economic data to support higher stock prices, like Tuesday’s 5% GDP growth during third quarter, that was driven by gains in health care spending. TheStreet’s Scott Gamm has details from New York.
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