Half Days, Early Closes and Thin Holiday Trading

US stock exchanges observe a handful of official half days each year — most notably the day after Thanksgiving and often the day before July 4th — when trading ends at 1:00pm Eastern instead of the usual 4:00pm, giving traders and staff time off around the holiday. On these shortened sessions, and on the regular full days immediately surrounding major holidays, trading volume tends to run well below normal as many institutional desks are lightly staffed or absent entirely, leaving a market with fewer active participants than usual.

This thinness matters for anyone running systematic strategies: bid-ask spreads widen, a given order size moves the price more than it would on a normal day, and volatility or volume-based signals computed without excluding these days can be skewed by a handful of unrepresentative sessions each year. Many backtests and risk models simply flag or exclude known half days and the days flanking major holidays so that a strategy's statistics reflect typical trading conditions rather than being distorted by a small number of thin sessions.

Bond markets have their own separate early-close and closure calendar (set by SIFMA) that doesn't always match the stock market's holiday schedule, so a strategy trading both equities and fixed income needs to track two different calendars rather than assuming one holiday list applies to all its instruments.