Wall Street stocks concluded a roller-coaster year on a high note on Thursday, reflecting optimism about 2021 despite continued weakness in the economy due to the coronavirus pandemic.
The Dow and S&P 500 closed at fresh records, capping a year in which they scored significant gains along with the Nasdaq, even amid elevated joblessness, rising hunger and acute pain in sectors such as hospitality, airlines, oil and gas and the performing arts.
“For Main Street it was a terrible year,” said Briefing.com analyst Patrick O’Hare. “For Wall Street, it was a fantastic year.”
For Main Street it was a terrible year. For Wall Street, it was a fantastic year- Briefing.com analyst Patrick O’Hare
The broad-based S&P 500 set an all-time high of 3,756.07, up 0.6 per cent for the session, and 16.3 per cent higher than the close of 2019.
The Dow Jones Industrial Average also scored a new record of 30,606.48, a gain of 0.7 per cent for the day and 7.2 per cent for the year.
The tech-rich Nasdaq Composite Index finished at 12,888.28, a staggering 43.6 per cent increase for 2020, though just 0.1 per cent higher for the day, reflecting the surge in companies that prospered from the so-called “stay-at-home” trade amid the pandemic.
Such huge gains seemed impossible in March as exchanges were forced to suspend trading when stocks were in free-fall as much of the US economy was shut down to combat the coronavirus.
The United States never fully managed to get the virus under control and concluded 2020 with its highest single day death toll at more than 3,900.
Yet markets pivoted quickly from the fear of a depression-like collapse after the Federal Reserve stepped in with extraordinary stimulus and Congress mobilised to enact its biggest-ever fiscal package, the $2.2 trillion Cares Act.
Stocks began regaining ground in late March and rose for much of the summer. Volatility picked up again in the autumn ahead of the November presidential election and as the infections spiked.
But Wall Street engineered a strong late-year rally as COVID-19 vaccines were approved and began to be rolled out, fuelling hope for an economic recovery in the new year.
However, analysts see risks ahead in the first part of 2021.
“We’ve priced in a lot of the good news and not the bad news,” said Art Hogan, chief market strategist at National Securities.
He said he expects the market to fixate on worrisome trends with the virus and weakening economic data in the upcoming period.
O’Hare agreed. “In large part, the market has done so well in 2020 because it is pricing in 2021,” he said.