2020- Wow, what a year! Over the past one year, we have endured a global pandemic, mass layoffs, a sinking economy, and a contentious presidential election. Our lives and lifestyles have changed, where working and learning from home has become the “new normal.”
2020 in Review
The year began with the impeachment trial of President Trump, which eventually ended with an acquittal by the Senate in February. By the time the World Health Organization announced a global pandemic in March, markets which had already been shaky from the uncertainty led into a steep sell-off, plunging stocks well below their 2019 values.
GDP was down 5% and second quarter GDP was down 31.4% In response to the economic turmoil caused by the pandemic, several pieces of legislation were passed to help boost the economy, which helped calm markets.
Markets rebounded over the summer and continued to climb toward the end of the year, especially as news of COVID-19 vaccine results became very promising.
September was a month of mixed news. The five largest stocks in the S&P 500 accounted for more than 20% of the entire index, the highest level in at least 30 years. Alphabet, Amazon, Apple, Facebook, and Microsoft gained around 40% as of the end of September, while the 495 other stocks in the index had collectively lost. Many were still concerned about the uncertainty of the election, a possible tech bubble bursting, and a second wave of COVID.
But surprisingly, the final quarter of 2020 saw stock markets soaring, with many excited over the news of promising vaccine results from Pfizer and Moderna. There were a LOT of ups and downs throughout the year. At one point, from Feb 19 to March 23, the S&P500 was down 34%! But by the end of the year, markets ended strongly. 2020 Market Returns Asset Class Index 2020 Return Large US Stocks SP500 16.26% Large US Stocks Dow Jones Industrial Average 7.23% Large US Value Stocks Russell 1000 Value 2.79% Small US Stocks Russell 2000 18.36% Bonds Bloomberg Barclays US Credit Index 9.32% International Stocks MCSI EAFE Index 7.79%
Eye on the Year Ahead
With a new Biden administration and Democratic control of Congress, we are keeping an eye on any legislation changes and as always, we will communicate any changes that may affect the economy or our clients’ portfolios or taxes. The new year brings with it a sense of hope: hope that the virus will be controlled; hope for a return to some form of normalcy in our daily lives; hope for economic prosperity and job security; and hope for peace, both here and around the world – and a good riddance to 2020!