Jim Kramer says the Santa Claus rally may start early this year

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CNBC’s Jim Kramer said on Wednesday that after the Fed’s close-watched policy decision earlier in the day, the stock market may start a potential Santa’s rally this year.

Technically speaking, the time window for the so-called Santa’s rebound is the last five trading days of the calendar year and the first two trading days of January. According to Bank of America data, the S&P 500 has been positive for 78.5% of the time since the end of 1928.

“We may see the start of the long-awaited Santa’s rally,” Kramer said on Wednesday, shortly after the three major US stock indexes closed in green. They made losses early in the session, but they reversed the situation after the Fed made a decision.

“You can’t rule it out because there is nothing on the calendar that can disrupt the market between now and the end of the year,” the “Crazy Money” host said. “Historically, the Santa Claus rally usually does not arrive until a few days later, but if it has already started, I wouldn’t be shocked.”

The U.S. Central Bank said it will accelerate the pace of reducing monthly asset purchases, a process known as gradual reduction. The Fed also predicts that it will raise interest rates three times in 2022, earlier than previously predicted, because the labor market continues to recover and the US economy is facing huge inflationary pressures.

Cramer said he believed that Fed Chairman Jerome Powell “pierced the needle” at Wednesday’s press conference and helped spark the afternoon’s stock market rally.

“More importantly, because Powell has already hinted that something similar is about to happen, the stock market has taken the damage and applied it to every sector. The bite force is still strong,” Kramer said.

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