“A Santa Claus rally is a rise in stock prices in the month of December, generally seen over the final week of trading prior to the new year. The rally is generally attributed to anticipation of the January effect, an injection of additional funds into the market, and to additional trades which must, for accounting and tax reasons, be completed by the end of the year. Another reason for the rally may be fund managers “window dressing” their holdings with stocks that have performed well.”-Wikipedia
Other possible cause of Santa Claus Rally are a drastic increase in spending since people buy X-mas and New Year gifts, and optimistic view or hope that the economy will better next year.
Reading the following story will help your understanding.