From 2012 to 2019, the S&P 500 nearly tripled in value. It produced approximately 2,016 trading days. Exactly one of them saw a gain of +4% or more. One. In eight years. The longest drought of extreme rally days since the index began. And when it finally arrived, it came the day after Christmas.
The previous seven episodes of this series covered 46 +4% rally days across six decades. Seventeen of those came in a single seven-month window during the 2008–09 crisis. The dot-com bear produced eight. Even Black Monday’s aftermath generated three in two weeks. Against that backdrop, the eight-year stretch from 2012 through 2019 is remarkable not for what happened, but for what didn’t.
The S&P 500 rose from 1,277 to 3,231 during this period — a gain of 153%. It set all-time highs in every year except 2015 and 2018. Six of the eight years produced double-digit returns. It was, by almost any measure, the greatest sustained bull market in American history. And the price of that sustained advance was the near-total absence of the explosive, panicked rallies that characterize bear markets and crises.
There is a deep lesson here. Extreme rallies require extreme fear. The +4% day is not a feature of healthy markets; it is a symptom of sick ones. The absence of +4% days from 2012 to 2019 was not a deficiency — it was the signature of a market that was rising steadily, digesting pullbacks without panic, and delivering returns through the relentless compounding of small gains rather than the fireworks of crisis-driven surges.
Consider the near-misses. In eight years of trading, only two days even came close to the +4% threshold:
August 26, 2015: +3.90%. The S&P bounced from 1,867.61 to 1,940.51 after a chaotic selloff driven by China’s surprise yuan devaluation and fears of a hard landing in the Chinese economy. The index had dropped 11% in four trading days — August 19 through August 25 — erasing seven months of gains. The August 26 bounce was sharp, but it fell 10 basis points short of +4%. And the recovery that followed was swift: by mid-October, the S&P was back at new highs.
January 4, 2019: +3.43%. A strong December jobs report and comments from Fed Chair Jay Powell suggesting flexibility on rate hikes sent the S&P up from 2,447.89 to 2,531.94. This came just ten days after the Christmas Eve massacre and nine days after the +4.96% Christmas miracle. The January 4 bounce was the market’s confirmation that the December selloff was over.
After those two? The next largest day was March 26, 2018, at +2.72%. Then January 2, 2013, at +2.54%. Over eight years, only six days exceeded +2.5%. For comparison, the two months of September–October 2008 alone produced seven days above +4% and dozens above +2.5%.
If +4% days require panic, then December 2018 was the month when panic finally found the quiet years. The causes were multiple and overlapping: the Federal Reserve was raising interest rates for the ninth time in the cycle, determined to “normalize” monetary policy. The US-China trade war was escalating with no resolution in sight. A partial government shutdown loomed. And President Trump was publicly criticizing Fed Chair Powell, raising fears about central bank independence.
The decline began in early December and accelerated through the holiday season. From December 3 to December 24, the S&P fell from 2,790.37 to 2,351.10 — a decline of 15.7% in fifteen trading days. December 24 itself — Christmas Eve, a half-day session that typically sees thin volume and quiet trading — produced a 2.71% loss. The S&P closed at its lowest level since April 2017, erasing 20 months of gains.
The intraday action on Christmas Eve was ugly. Volume was low, but the selling was relentless. There was no panic event, no bank failure, no sovereign crisis. Just a steady drumbeat of algorithmic and institutional selling into a vacuum. Treasury Secretary Steven Mnuchin made the remarkable decision to call the heads of the six largest US banks on December 23 to confirm they had “ample liquidity” — a reassurance that nobody had asked for and that struck many as bizarre, raising fears rather than calming them.
The day after Christmas, the S&P 500 opened sharply higher and never looked back. There was no single catalyst — no policy announcement, no trade deal, no Fed pivot. The rally was driven by the simplest force in markets: prices had overshot to the downside, and bargain hunters showed up.
The numbers: the S&P closed at 2,467.70, up from 2,351.10 — a gain of +4.96%. It was the largest single-day percentage gain since March 23, 2009 — the day the S&P rallied 7.08% near the bear market bottom. For context, the +4.96% on December 26 was larger than any single-day gain during the entire European debt crisis, the Flash Crash aftermath, or the August 2015 China scare.
Breadth was broad: of 5,447 stocks with data, 4,406 advanced (80.9%), with an average gain of 3.69% and a median of 3.36%. The leaders were high-growth technology and momentum names that had been punished hardest in the selloff: Tesla (+10.41%), Twilio (+12.96%), Roku (+11.70%), MongoDB (+11.02%), and Okta (+11.29%). Energy names also surged as oil bounced: Ovintiv (+13.27%) and Range Resources (+10.64%).
Every day with a +2.5% return between 2012 and 2019 — the complete list. In eight years, there were six.
| Date | Return | Close | Prior Close | Context |
|---|---|---|---|---|
| Dec 26, 2018 | +4.96% | 2,467.70 | 2,351.10 | Christmas Eve bounce; bargain hunting after 15.7% selloff |
| Aug 26, 2015 | +3.90% | 1,940.51 | 1,867.61 | China devaluation bounce; 11% drop in 4 days |
| Jan 4, 2019 | +3.43% | 2,531.94 | 2,447.89 | Strong jobs report; Powell signals flexibility on rates |
| Mar 26, 2018 | +2.72% | 2,658.55 | 2,588.26 | Trade war de-escalation hopes |
| Jan 2, 2013 | +2.54% | 1,462.42 | 1,426.19 | Fiscal cliff deal reached |
| Sep 8, 2015 | +2.51% | 1,969.41 | 1,921.22 | China stabilization; rebound from August selloff |
| Stock | Company | Return | Mkt Cap ($B) |
|---|---|---|---|
| TWLO | Twilio Inc. | +12.96% | 18.9 |
| OVV | Ovintiv Inc. | +13.27% | 15.7 |
| ROKU | Roku, Inc. | +11.70% | 13.5 |
| OKTA | Okta, Inc. | +11.29% | 13.4 |
| MDB | MongoDB, Inc. | +11.02% | 21.0 |
| KTOS | Kratos Defense | +10.67% | 16.3 |
| RRC | Range Resources | +10.64% | 10.3 |
| TSLA | Tesla, Inc. | +10.41% | 1,468.0 |
| INSM | Insmed Inc. | +14.14% | 30.1 |
| FTAI | FTAI Aviation | +11.05% | 22.8 |
The movers tell the story. High-growth SaaS names (Twilio, Okta, MongoDB), momentum stocks (Tesla, Roku), and beaten-down energy (Ovintiv, Range Resources) led the charge. These were the names that had been sold hardest in December — growth stocks hit by rising rates, energy stocks hit by falling oil. The December 26 rally was the reversal trade: buy what was most hated.
The December 26 rally was the spark, but the fire was the Fed pivot that followed. On January 4, 2019, Fed Chair Powell spoke at the American Economic Association and uttered the words the market had been waiting for: the Fed would be “patient” on further rate hikes and would be “prepared to adjust policy quickly and flexibly.”
The S&P jumped 3.43% on January 4 — the second-largest day in our eight-year window. From the Christmas Eve low of 2,351.10, the index would rally to 3,240.02 by the end of 2019 — a gain of 37.8% in twelve months. The selloff that produced the Christmas miracle turned out to be the last buying opportunity of the pre-COVID era.
And the Fed? It would cut rates three times in 2019, reversing the last three hikes of 2018. The “normalization” was over. The quiet years were back. There would not be another +4% day until March 2020 — when the world changed again.
The absence of +4% days between 2012 and late 2018 was a function of three converging forces:
The Fed put. From 2012 through 2018, the Federal Reserve maintained an explicit or implicit backstop for markets. Three rounds of quantitative easing (QE1 through QE3) pumped trillions of dollars into the financial system. Forward guidance suppressed volatility. Every meaningful selloff was met with soothing words from Fed officials, and the market learned to “buy the dip” before declines could accelerate into panics. When dips get bought quickly, you don’t get +4% days — you get +1.5% days.
Low volatility bred lower volatility. The VIX averaged 14.5 over this period, compared to 25+ during crisis years. Low realized volatility attracted volatility-selling strategies (short VIX ETFs, covered call writing, variance swaps), which further suppressed volatility in a self-reinforcing loop. The machine was wired for calm.
No systemic threat. The crises of 2012–2019 were real but contained. The European debt crisis resolved (sort of). China devalued but didn’t crash. Brexit shocked markets for two days, not two months. The trade war dragged on but never escalated to full economic decoupling. Without a genuine systemic threat, fear never reached the levels required for +4% rally days.
Eight years. One +4% day. The stretch from 2012 to 2019 proved something that every episode of this series has been building toward: extreme rallies are the children of extreme fear. When the Fed backstops every dip, when volatility is systematically sold, when crises are contained before they metastasize — you don’t get +4% days. You get steady, compounding returns that turn 1,277 into 3,231.
The Christmas Eve Miracle of December 26, 2018 was the exception that proved the rule. It required a 15.7% decline in fifteen trading days, a Treasury Secretary making panicked calls to bank CEOs, and the specter of a Fed that had overtightened into a slowing economy. When the +4.96% bounce finally came, it was the market’s way of saying: this is not 2008. And it wasn’t. The S&P would rally 38% over the next twelve months.
But the quiet years were about to end. The next episode — March 2020 — would produce more +4% days in a single month than the previous eight years combined. The drought was over.