Wall Street's Rally Brought $5 Trillion In Wealth To US Households — Just In Time For Christmas

The holiday season has brought a surprising and significant gift to American households this year, in the form of a ‘Santa Rally’ on Wall Street.

Robust stock market gains in November and December are poised to significantly enhance the wealth of U.S. households in the final quarter of the year.

Benzinga’s calculations suggest that if these market gains hold until the end of the year, the potential increase in American households’ wealth could approach $5 trillion.

Celebrating The ‘Santa Rally’

After a 2.2% decline in October, the S&P 500 index rebounded by 8.9% in November, marking the fourth-largest monthly gain of the past decade and the best return for the November month since 1980.

The stock market’s remarkable turnaround was a welcomed surprise for investors, setting the stage for what would become a truly remarkable holiday season.

Positive sentiment continued into December, with the benchmark S&P 500 index rising by 3.1% in the first half of the month.

The Santa Rally, a market phenomenon characterized by a surge in stock prices in December, was further cemented by the dovish stance taken by the Federal Reserve during its last meeting of the year.

Read Also: Will November’s ‘Turkey Rally’ Set Stage For December’s ‘Santa Claus Rally’ For Stocks?

As of Dec. 15, the S&P 500 Index, as tracked by the SPDR S&P 500 ETF Trust SPY, has surged by 10.2% in the fourth quarter.

These gains had a substantial impact on American households, as they hold a significant portion of their wealth in equities.

Numbers Speak Loud: Market Rally Will Strongly Boost US Household Wealth

Data from the Federal Reserve shows that at the end of the third quarter of 2023, the combined net worth of households and nonprofits in the United States reached $151.0 trillion.

Within the overall wealth portfolio, the value of corporate equities, both directly and indirectly held by U.S. households, amounted to $43 trillion.

Assuming the S&P 500’s 10.2% increase during the fourth quarter as proxy for broader equity market gains, this translated to a potential increase of $4.39 trillion in the value of households’ equity holdings.

It’s important to note that the overall wealth increase could be even higher when accounting for the share of bonds and alternative assets held by U.S. households. Notably, Treasury bonds, represented by the Invesco Equal-Weight 0-30 Year Treasury ETF GOVI, saw a strong 7.8% surge in the fourth quarter.

Longer-dated Treasuries, represented by the iShares 20+ Year Treasury Bond ETF TLT, performed even better with a 13% rally.

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