The shares were mixed on Thursday, the last trading day of the year. O Dow (INDU) was flat in the morning, after ending on a record high Wednesday, while the broader S&P 500 (SPX) rose 0.1%. O Nasdaq Composite (COMP) fell 0.1%.
“2020 is coming to an end,” wrote Paul Hickey, co-founder of Bespoke Investment Group, in a note to clients. “Unfortunately, 2021 is going to start looking a lot like 2020, but I hope that by the end of the year it will look more like something better.”
Although the economy is nowhere near its pre-pandemic strength, stocks are in record territory. S&P and Nasdaq recorded their latest all-time highs on Monday. All three indexes ended the year with gains. For Nasdaq, it looks like the best year since 2009.
In early 2020, investors feared that the market might have less wind in favor, as the Fed stopped cutting interest rates and the economic jolt of the Trump’s tax cuts are over. In addition, the US-China trade agreement was still at stake. But they didn’t know they were about to fall off a cliff.
After reaching record levels earlier this year, the market began to shake with fear of the coronavirus pandemic in February and deepened its sale in March, as blocking measures were established in the United States. The Dow routinely set new records for its biggest drop in points on a day in history, and the New York Stock Exchange had to suspend trading on 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 rebounded faster than many expected.
“This has been a year with many reminders for investors: number one, don’t overdo it,” Leo Grohowski, chief investment officer at BNY Wealth Management, told CNN Business.
As the market recovered from March’s sharp losses, investors who panicked and pulled their money lost on the rise.
The duration and strength of the stock market boom were one of the most surprising parts of the year for investors. People will look at this year and ask themselves how these market records could have been achieved in a scenario of unprecedented economic difficulties, said JJ Kinahan, chief strategist at TD Ameritrade.
The lesson: “Wall Street is not reflecting the main street,” said Kinahan. “But the other part of that is that there is also no main street stock exchange.”
In fact, companies that ended up gaining market share during the pandemic, such as Amazon (AMZN) and Walmart (WMT), were already huge companies before Covid-19. Meanwhile, smaller companies and family stores were, and still are, in a very different situation.
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