The "Santa Claus rally" that is occurring in the stock market after the holidays is setting up an optimistic view among investors as 2026 begins. Phil Luck, a director at the Center for Strategic and International Studies, joins CBS News to explain.

New York

The U.S-brokered ceasefire deal in Gaza is holding, after Hamas released the remaining Israeli hostages.

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U.S. stock markets are currently experiencing the 'Santa Claus rally,' a historical trend where markets tend to rise during the last week of December and the first two trading days of January. This year, the rally appears weaker than in previous years, which experts suggest may indicate some market hesitation and uncertainty about the economic outlook for 2026.

Attention is also focused on the Federal Reserve, as President's recent comments have fueled speculation about a possible change in leadership when Jerome Powell's term ends in May. The leading candidates discussed are Kevin Warsh, viewed as a steady and experienced choice, and Kevin Hassett, seen as a more partisan pick who advocates for lower interest rates, which could affect market stability.

Stocks rally after Christmas holiday

In today's Money Watch, we are in the middle of the so-called Santa Claus rally on Wall Street. The New York Stock Exchange explained it this way yesterday on X. Quote, historically, the Santa Claus rally refers to the tendency for markets to rise during the last week of December and the first two trading days of January. The seasonal boost often sets a positive tone for the new year. For more on this, let's bring in Phil Luck, who has an aptly named last name for this segment. He's the director of the economics program at the Center for Strategic and International Studies, more commonly known as CSIS. So, Phil, the Dow Jones did lose almost 250 points yesterday, but what can you tell us about this Santa Claus rally? Yeah, so it's an interesting market phenomenon that in some ways has very little to do with the underlying health of the economy, but can tell us quite a bit about sentiment in the market. The rally, which you've noted, is basically the last two weeks in December and the first two weeks in January. The market tends to do pretty well, historically up about 1.3%. About four out of every five years, the market does really well during this period. This is due to shuffling of tax burdens, buying and selling of stocks, the historically low level of trades, which makes underlying trades create more volatility, and there's also a behavioral dynamic here, which is basically if you think markets are going to go up because they historically do, they tend to go up because people buy into that. What we can note from this about the economy, though, is sort of more about the underlying sentiment. We're seeing a slightly weaker sort of Santa Claus bounce than most years, again, only about halfway through it, and that might indicate some softness in the market and some hesitation about the future of a trajectory in 2026. Let's talk about the president's comments yesterday, hinting again about a potential change at the top of the Fed, of course. Fed Chair Jerome Powell, his term ends in May. The president sort of flirted with the idea yesterday of firing him, though he lacks the authority to do so. What do we know about the leading candidates for this, especially in light of what Bank of America Chair Brian Moynihan told our Face the Nation's Margaret Brennan that, look, if there is a partisan head of the Fed, the markets will react really negatively? Yeah, absolutely. So, I mean, of course, we don't know this for sure, but it seems like we're in a battle of two Kevins, Kevin Walsh and Kevin Hassett. Of the two, I think the candidate that would make markets more comfortable is Kevin Walsh. Kevin Walsh, sorry. Kevin has a long history as a Fed governor. He was a Fed governor during the financial crisis, would be seen as sort of a steady hand at the wheel. He not only as being sort of a sort of consensus pick, I think you could also say that he is also a change agent. He's a candidate who not only has deep experience, but also has been quite critical of some of the ways in which the Fed has operated, some of its use of extraordinary measures like quantitative easing. And so this is not to say that he would sort of change things entirely, but he really is looking for a way to sort of change the dynamics of the Fed. On the other hand, we have Kevin Hassett, who I think would be seen as much more of a partisan pick, a former head of the Council of Economic Advisers at the National Economic Council as well in the White House, has spoken quite often recently about sort of the need to lower rates. So I think that would make these spook markets a bit more, showing less concern about the inflationary pressures that lower rates would cause. And the last thing I would say here is, even though the Fed chairman doesn't themselves pick the rate, the FOMC does that as a group, the Fed chairman matters a lot. One thing you can say is because we have so much debt, we have about $38 trillion in debt, a 1 percent increase in interest rates would result in about $300 billion per year more the government would have to pay out in interest. Phil Luck, thank you so much. Come back anytime.

The United Arab Emirates says it's withdrawing its remaining forces from Yemen. The move comes after Saudi Arabia bombed a port in Yemen, saying it targeted an arms shipment intended for a UAE-backed separatist force.

Al Mukalla

Saudi Arabia bombs port in Yemen

Eurostar suspended train services in Europe on December 30 after a power supply issue in the Channel tunnel, sparking travel chaos for passengers during the very busy New Year period. Its services to and from London “are suspended until further notice" and the company advised its passengers to rebook their journeys for other days.

Paris

Eurostar cancels all services after power issue

In an overnight strike, the Saudi military hit a Yemeni port saying they were neutralising a weapons shipments arriving from UAE. The UAE has denied the shipment contained weapons and claimed the vehicles were not intended for any groups. Both countries have supported the fighting sides in the over-decade long war in Yemen, but this strike has turned this rivalry into an open dispute.

The UAE denies shipping weapons to Yemen after overnight Saudi strike

The Kremlin said Tuesday it would toughen its negotiating position in talks on ending the war in Ukraine after accusing Kyiv of attacking a Russian presidential residence — an allegation that Kyiv said was baseless and intended to prolong the conflict.

Moscow

Russia will toughen negotiating stance on war in Ukraine

China fired rockets into waters off northern and southern Taiwan on Tuesday (December 30) and deployed new amphibious assault ships alongside bomber aircraft and destroyers on the second day of its most extensive war games.

Taipei City

China fires rockets towards Taiwan in war games simulating blockade

President Donald Trump on Monday confirmed an alleged drug-related site was targeted during a recent strike, saying, "they load the boats up with drugs, so we hit all the boats and now we hit the area." Trump did not say when the strike happened or exactly where.

Caracas

U.S. strike hits Venezuelan port facility

The search for Malaysia Airlines flight 370 that went missing in 2014 with 239 people on board is expected to resume Tuesday (December 30). The Malaysian government and a private marine robotics company say they will use advances in technology to aid in the search.

Kuala Lumpur

Search resumes for Malaysia Airlines flight that disappeared in 2014

The two countries have agreed to hold fire, freeze troop movements and allow civilians to return home under a new agreement.

Krong Poi Pet

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Head of Yemen's presidential council, which is supported by Saudi Arabia, says UAE-backed forces in the country should leave within 24 hours.

Yemen’s presidential council cancels UAE defence deal

U.S. President Donald Trump said the United States could support another major strike on Iran were it to resume rebuilding its ballistic missile or nuclear weapons programs and warned Hamas of severe consequences if it does not disarm.

Florida

Trump warns Iran of possible strike, urges Hamas to disarm

U.S. hit an area in Venezuela where boats are loaded with drugs, Trump says, as Pentagon carries out another deadly strike in the Pacific. This claim follows a series of U.S. strikes on boats in the Eastern Pacific, raising the total number of known strikes to 31 and resulting in over 100 deaths.

Trump claims attack on a dock in Venezuela, strikes kill two in Pacific

The Taiwanese government says it has placed its forces on alert as China intensifies its military presence in the Indo-Pacific Ocean and launches air, navy and rocket drills around the island.

Taiwan's forces on alert as China launches military drills

Ukrainian President Volodymyr Zelenskyy is denying Russian Foreign Minister Sergei Lavrov’s claim that Ukraine tried to attack President Vladimir Putin's residence in northern Russia.

Kyiv

Ukraine Invasion

Zelenskyy denies Russian claim that Ukraine targeted Putin’s residence

President Trump said after a meeting with Israeli Prime Minister Benjamin Netanyahu that Hamas must disarm soon or "there will be hell to pay." He said the next phase of the Gaza peace plan could move forward quickly if Hamas disarms.

Washington

Trump warns "hell to pay" if Hamas doesn't disarm

CBC’s Kris Reyes highlights the biggest AI advancements in 2025 along with the continued calls to establish clear boundaries in an effort to prevent misuse.

DeepSeek and the biggest AI advancements in 2025

Russia accused Ukraine on Monday (December 29) of trying to attack President Vladimir Putin's residence in northern Russia, although it provided no evidence to back up an assertion that Kyiv dismissed as baseless and designed to undermine peace negotiations.

Russia claims Ukraine tried to attack Putin residence

Two helicopters collided above Hammonton, New Jersey, and one person has died, officials say. CBS News' Elaine Quijano reports.

Hammonton

Helicopters collide in New Jersey

U.S. President Donald Trump is meeting with Israeli Prime Minister Benjamin Netanyahu in Florida on Monday (December 29) as questions linger about the future of the U.S.-backed ceasefire in Gaza.

Palm Beach

Trump and Netanyahu meet in Florida to discuss Gaza ceasefire

British-Nigerian boxer Anthony Joshua was involved in a road accident on Monday in Makun, Ogun State, south-west Nigeria.

Makun

British boxer Anthony Joshua survives car crash that killed two others

In a new show of force, China has mobilized its navy, air force, and ground troops to simulate a blockade of the self-ruled island's key ports. The military drill comes on the heels of an $11bn US arms sale to Taipei.

China stages new military exercises around Taiwan

U.S. President Donald Trump said he believes both Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin truly want peace as he and Zelenskyy met in Florida. Some experts say Trump is 'delusional' if he truly thinks Putin wants peace.

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Although the U.S. security guarantees for Ukraine have been "100% agreed," they have a short expiration date, the Ukrainian president explained after revealing more details following his meeting with Trump on Sunday.

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China's military moved army, naval, air force and artillery units around Taiwan on December 29 for its "Justice Mission 2025" drills, as the island vowed to defend democracy and mobilized troops to rehearse repelling a potential Chinese attack.

China launches 'Justice Mission 2025' war games around Taiwan

President Trump spoke with Russian President Vladimir Putin by phone before meeting with Ukrainian President Volodymyr Zelenskyy in Florida on Sunday. Trump said he thinks both men are ready for peace.

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Far-right politics have pushed further into the mainstream across much of Europe. Populist parties, even in opposition, are shaping national debates on migration and the economy. The trend reflects growing voter frustration over living costs, borders and political trust.

Berlin

Far-right politics gaining influence across Europe

Ukrainian President Zelenskyy is set to discuss a new peace plan draft with U.S. President Trump in Florida on Sunday (December 28). However, fresh Russian attacks on Kyiv have left a third of the city without power, undermining local confidence.

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A report has sought to catalogue some of the most significant extreme weather events of the year. UK charity Christian Aid found that heatwaves are pushing the limits of human adaptation, hurricanes and typhoons are breaking records, and droughts are devastating lives across the globe. It's all coming at a heavy financial cost.

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Russia attacked Kyiv and other parts of Ukraine with hundreds of missiles and drones on Saturday, ahead of what President Volodymyr Zelenskiy said would be a crucial meeting with U.S. President Donald Trump to work out a plan to end nearly four years of war.

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French actor Brigitte Bardot has died aged 91, her foundation said on Sunday (December 28). She shot to international fame dancing the mambo barefoot in "And God Created Woman," her tousled hair and fierce energy radiating a sexual magnetism rarely before seen in mainstream cinema.

Saint-Tropez

Brigitte Bardot, France's 'legend of the century', has died

A ceasefire is now in place between Cambodia and Thailand after weeks of cross-border fighting. But with nearly a million civilians displaced and trust in short supply, the focus now is on whether the guns will stay silent.

Stocks rally after Christmas holiday

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