Bond market and bank holidays differ
Bond traders follow a more expansive holiday calendar under guidelines set by the Securities Industry and Financial Markets Association (SIFMA), a trade group that represents securities firms, banks and asset management companies.
In 2021, U.S. bond markets close on eight of the nine days the stock exchanges are silent (the exception is Good Friday) plus Columbus Day (Monday, Oct. 11) and Veterans Day (Thursday, Nov. 11).
They also close early on six occasions: at 12 p.m. ET on Good Friday; and at 2 p.m. ET on the Friday before Memorial Day, the Friday before Independence Day, Black Friday, Christmas Eve and New Year’s Eve.
The stock market calendar also differs from the Federal Reserve System holiday schedule followed by most U.S. banks. The Fed observes Columbus Day and Veterans Day, does not take Good Friday off and does not have any formally scheduled early closing days.
Stock exchanges rarely sleep for long
Except in rare circumstances, three-day holiday weekends are the longest time the stock market goes quiet. The exchanges have closed for more than three days running only a handful of times in the past century, most recently during Superstorm Sandy in 2012 and after the 9/11 attacks in 2001.
The three-day limit is not a formal policy, but rather a rule of thumb that prevents “investor angst” from building up during an extended down period and creating volatility when the market reopens, says Sam Stovall, chief investment strategist at the investment research firm CFRA.
“There’s an old saying that bull markets take the escalator while bear markets take the elevator,” Stovall says. “Since fear is a greater motivator than greed, I think investors don’t want to be denied access to their money for too long. Otherwise they end up taking money off the table, especially if some unnerving event occurred while the exchange was closed.”