A year ago, the United States stock market hit rock bottom, with the S&P 500 reaching its limit after a 34% drop in just 23 trading sessions.
At the time, few could imagine the recovery the market has seen, including 34 record highs for the index since last year’s low. Despite a global pandemic that killed almost 550,000 people in the United States, eliminated millions of jobs and restricted economic activity, stock indexes rose to new highs.
Behind the impressive recovery is a number of factors, including, initially, the Federal Reserve’s rapid emergency measures to support financial markets and the economy. This helped to push US stocks below their 2020 low and started a period of leadership sustained by growth and technology stocks. As investors returned to the stock market last year, they acquired shares in companies that would benefit from the pandemic. Unlike sectors such as energy and retail, which suddenly faced uncertainty, technology stocks were praised by some analysts as having great growth potential.
Recently, however, that recovery has stalled, sending the high-tech Nasdaq Composite briefly to a correction – a 10% drop from a recent high. Since the index’s recent record on February 12, growth and technology stocks have struggled. In contrast, other sectors rose, including energy and finance.
The following charts show how the market has changed since February 12.