2021 was a dozen spiritually debilitating months of disruption and sickness — but also a hopeful time of vaccination, resilience and recovery. Either way, the market loved it.
The big picture: The S&P 500 jumped nearly 27% last year, underpinned by super-supportive monetary policy from the Federal Reserve and hopes for forthcoming Federal spending from the Biden administration. It was the third straight double-digit showing for the benchmark index.
- As of Dec. 31, the S&P was up more than 90% over the last three years, its best three-year stretch since 1999.
Why it matters: Even casual market historians might find the comparison with 1999 concerning, as it was almost the exact moment when the dot-com era tilted from boom to bust.
- The actual high-water mark was March 24, 2000, after which the market suffered a slow-moving crash that sank stocks roughly 50% over the next couple of years.
State of play: Few analysts on Wall Street foresee a similar cataclysm in the offing. (Although few Wall Street analysts who predict crashes remain employed.)
- Analysts think the S&P 500 will rise about 10% in 2022, according to FactSet data. It’s just a guess, but, sure, why not.
The bottom line: With little clear direction at the moment, investors are crowding into some of the same mega-cap tech stocks — Apple, Alphabet, Microsoft, and most recently, Tesla — that in recent decades have proved immune to pandemics and economic cycles alike.
- Those four companies alone contributed more than 25% of the total return S&P 500 investors enjoyed in 2021, according to data from S&P Dow Jones Indices.
- A rally in those shares briefly pushed Apple’s market value over $3 trillion for the first time on Monday.
