Shares were mixed on Thursday, the last trading day of the year. The Dow(INAPPROPRIATE) was flat in the morning, after finishing on a record high Wednesday, while broader S&P 500(SPX) was up 0.1%. The Nasdaq Composite(COMP) slipped 0.1%.
“2020 is coming to an end,” Paul Hickey, co-founder of Bespoke Investment Group, writes in a note to clients. “Unfortunately, 2021 will look a lot like 2020 at the beginning, but hopefully it will look more like something better by the end of the year.”
While the economy is nowhere near as strong as it was before the pandemic, stocks are at record speed. The S&P and Nasdaq hit their latest record highs on Monday. All three indexes are poised to end the year with a profit. For the Nasdaq, it promises to be the best year since 2009.
In early 2020, investors worried that the market would have less tailwind as the Fed stopped cutting interest rates and the economic shock from theTrump’s tax cuts were increasing. In addition, the US-China trade deal was still at stake. But they didn’t realize they were about to fall off a cliff.
After hitting record highs at the start of the year, the market began to shake with fear of the coronavirus pandemic in February and the sell-off deepened in March as lockdown measures took effect in the United States. The Dow routinely set new records for its biggest one-day point falls in history, and the New York Stocks Exchange had to suspend trading the S&P 500 several times because the index plummeted too quickly.
But in the months that followed, as the economic pain of the pandemic continued, the stock market recovered faster than many expected.
“This year was a year of many memories for investors: Number one, don’t overreact,” Leo Grohowski, BNY Wealth Management’s chief investment officer, told CNN Business.
As the market bounced back from the steep March losses, investors who panicked and raised their money lost during the rally.
The duration and strength of the stock market rally was one of the most surprising parts of the year for investors. People will look back at this year and wonder how such market records could have been set against the backdrop of unprecedented economic hardship, said JJ Kinahan, chief strategist at TD Ameritrade.
The lesson: “Wall Street just doesn’t reflect the main street,” said Kinahan. “But the other part of this is there’s no stock market on the high street either.”
Companies that gained market share during the pandemic, such as Amazon(AMZN) and Walmart(WMT), were huge companies before Covid-19. Meanwhile, smaller businesses and mom-and-pop stores were and are in a very different situation.
