Markets eager for Santa visit

NEW YORK – December has earned a reputation for being a good time for stocks, a seasonally strong period when investors are full of holiday cheer and feeling flush thanks to year-end bonuses.

In fact, the last month of the year has delivered an average gain of 1.6 percent on the Standard & Poor’s 500 going back to 1950, according to the Stock Traders’ Almanac. During the past 54 years, stocks have lagged in only 13 Decembers.

But this year, after a solid post-election advance and with the major indexes already hovering in the range of many analysts’ 2004 projections, a Santa Claus rally is far from a sure thing. Volatile oil prices and a feeble dollar are formidable impediments to a further move up in 2005. But many market watchers think those can be overcome in the near term.

One number you might want to keep an eye on next month that’s not always associated with investing is the temperature. In the National Oceanic and Atmospheric Administration’s final winter outlook, issued Nov. 18, forecasters predicted an enhanced likelihood of lower-than-average temperatures in much of the East, Middle Atlantic and South. With heating oil supplies well below year-ago levels, it wouldn’t take much cold weather to rattle the markets, said Kenneth McCarthy, chief economist with vFinance Investments Inc.