New York (CNN Business)The stock market’s wild 2020 ride is finally coming to an end. Stocks are at record highs once again, just like they were at the start of this unprecedented year.
After starting the day mixed, stocks were in the red around midday Thursday, the final trading day of the year. The Dow (INDU) slipped 0.1%, or 31 points, after finishing at a record high Wednesday, and the broader S&P 500 (SPX) was also down 0.1%. The Nasdaq Composite (COMP) fell 0.3%”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 out looking a lot like 2020, but hopefully, by the end of the year, it’s looking more like something better.”
While the economy is nowhere near its pre-pandemic strength, stocks are in record territory. The S&P and Nasdaq notched their latest all-time highs on Monday. All three indexes stand to end the year with gains. For the Nasdaq, it is shaping up to be the best year since 2009.At the start of 2020, investors worried the market might have less tailwind as the Fed stopped cutting interest rates and the economic jolt from the Trump tax cuts ran out. On top of that, the US-China trade deal still hung in the balance. But little did they know they were about to fall off a cliff.Read MoreAfter hitting record highs at the start of the year, the market began to quiver in fear of the coronavirus pandemic in February and deepened its selloff in March as lockdown measures took hold across the Unites States. The Dow routinely set new records for its biggest one-day point drops in history, and the New York Stocks Exchange had to suspend trading in the S&P 500 multiple times because the index plummeted too fast. But in the months that followed, as the economic pain from the pandemic continued, the stock market recovered faster than many expected.”This year was a year with a lot of reminders for investors: number one, don’t overreact,” Leo Grohowski, chief investment officer at BNY Wealth Management, told CNN Business.As the market roared back from its steep March losses, investors who had panicked and pulled their money lost out on the rally.The length and strength of the stock market rally was one of the most surprising parts of the year for investors. People will look back at this year and wonder how such market records could have been reached against the backdrop of unprecedented economic hardship, said JJ Kinahan, chief strategist at TD Ameritrade.
The lesson: “Wall Street just isn’t reflecting main street,” Kinahan said. “But the other part of this is that there is also no main street stock market.”Indeed,companies that ended up gaining market share during the pandemic, such as Amazon (AMZN) and Walmart (WMT), were already enormous businesses before Covid-19. Meanwhile, smaller businesses and mom-and-pop stores were, and still are, in a very different situation.
Source: edition.cnn.com