A year ago, the US stock market hit bottom, with the S&P 500 bottoming out after plunging 34% in just 23 trading days.
At the time, few could have imagined the recovery the market has seen, including 34 record highs for the index since last year’s low. Despite a global pandemic that killed nearly 550,000 people in the US, cut millions of jobs and curtailed economic activity, stock indexes have soared to new highs.
Behind the stunning rally are a number of factors, including the initial rapid emergency response by the Federal Reserve to support the financial markets and the economy. These helped push US equities from their 2020 low and ensure long-term leadership through growth and technology stocks. When investors got back to the stock market last year, they picked up shares of companies benefiting from the pandemic. Unlike sectors such as energy and retail, which suddenly faced uncertainty, technology stocks were praised by some analysts for having great growth potential.
Recently, however, that rally has stalled, sending the tech-heavy Nasdaq Composite briefly into a correction – down 10% from a recent high. Since the index’s recent high on Feb. 12, growth and technology stocks have been struggling for the most part. In contrast, other sectors have risen sharply, including energy and financial services.
The following graphs show how the market has changed since February 12.