US stocks ended 2020 with a gain of more than 16 percent – well above the historical average – after a technology-led recovery pulled Wall Street out of a brief bear market to set a record high in pandemic challenge. , recession and political unrest.
Nasdaq Composite, dominated by tech giants like Apple, Microsoft, Alphabet and Amazon, gained more than 44 percent this year to record its best performance since 2009, with consumer work and spending going online.
The annual gain of 16.3% for the S&P 500 compared to an average of 11.8% in the previous decade. It has already registered a positive year in 14 of the first 21 years of the century.
“It was a generally bullish year for stocks, in contrast to an unusually difficult year for all of us,” said Jack Ablin, chief investment officer at Cresset Capital.
New York activity was silenced in the last trading session of 2020 on Thursday, with many investors taking time off during the week between Christmas and New Year. The S&P 500 was up 0.6 percent, while the Nasdaq was 0.1 percent higher.
The government debt market was also quiet, with the yield on 10-year Treasury notes falling to 0.91%. That number would have seemed implausible at the beginning of the year: it started close to 2 percent before the coronavirus pandemic led the Federal Reserve to cut interest rates and inject trillions of dollars into markets to protect the financial system and support a blocked economy from USA.
“If someone had told us that a pandemic would hit in February 2020 and that markets would fall and yields would collapse, we would have agreed,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “If anyone had added that the Fed would have come to the rescue and gone all in, we would still be with you.
“But, to add that this would be one of the best equity and risk markets we’ve seen, you would have lost us.”
With very low yields on insurance assets, investors were willing to pay more for companies with the prospect of fast-growing cash flows, especially those whose businesses made big leaps in 2020.
Zoom Video Communications’ shares, for example, are close to 400 percent, as videoconferencing has replaced personal and family meetings. In the midst of a race to upgrade the technology infrastructure, semiconductor companies were also big winners. AMD’s shares have doubled this year.
Apple, which in August became the first publicly traded company to be worth $ 2 trillion, ended the year up 81%.
And then there were shares favored by retail and institutional investors. Electric car maker Tesla – closing the year in a more profitable position, with powerful growth prospects and now a spot on the S&P 500 – has risen about 750 percent.
The rise went beyond growth stocks to more firmly embrace economically sensitive stocks in November, after the first advances in the Covid-19 vaccine.
As a result, the energy and banking sectors performed the best in the last two months of the year, adding 28 percent and 20 percent, respectively. Still, it was not enough to make up for the losses that the two sectors had previously suffered; finances lost 4.1 percent in 2020 and energy was made 37.3 percent.
After the worst oil crash in decades earlier this year, the American West Texas Intermediate benchmark ended 2020 at $ 48.52 a barrel, down 21% since the beginning of the year, but slightly above the price needed by many producers oil prices continue to make a profit. The international benchmark Brent ended the year at $ 51.72 a barrel, down 23% since January.
The US dollar rose 0.3 percent, as measured against a basket of currencies, but is almost 7 percent lower than at the beginning of the year, its worst annual performance since 2017.
Additional reporting by Derek Brower