January Effect

Each year, the stock market tends to increase slightly in value between December 31 and the end of the first week of January.

Known as the January Effect, this rise starts when investors sell underperforming stocks at year-end to claim capital losses on their tax returns.

After the new tax year begins on January 1, the same investors tend to reinvest the money from those sales, heightening demand temporarily, and making the overall market rise slightly during that week.