THE WEEK ON WALL STREET
Stocks moved higher during a holiday-shortened week of trading, capping off a turbulent, but otherwise strong year for equity investors.
The Dow Jones Industrial Average gained 1.35%, while the Standard & Poor's 500 increased by 1.43%. The Nasdaq Composite index, which led all year, added 0.65%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.02%.1,2,3
Stocks End 2020 on a Positive Note
Stocks established fresh record highs last week, propelled by the signing of a COVID-19 relief bill, which delivered on a long-awaited, new round of economic stimulus and served to prevent a government shutdown in the near term.4
After pulling back on disappointment that the Senate was not able to increase individual stimulus payments to $2,000, stocks reversed direction as the approval of another vaccine by the U.K. lifted investor sentiment.
Ahead of the New Year holiday, stocks surged higher, leaving the Dow Jones Industrials Average and the S&P 500 Index to close 2020 at record highs.
The Unexpected IPO Boom
Companies raised over $167 billion in initial public offerings this year, blowing past the record of $107.9 billion set in 1999.5
This explosion in capital raising was one of the biggest surprises this year, especially considering the flight to safety in March and April. The introduction of unprecedented monetary easing played a critical role helping this flood of new issuance.
Also playing a role was the popularity of SPACs (Special Purpose Acquisition Corporations). A SPAC is a company that is formed to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. SPACs accounted for almost half of the fundraising in the IPO market.6
We join all Americans in happily drawing the curtain on 2020. Though it was a challenging and tragic year for so many, there are good reasons to believe that 2021 will be a year of progress in returning to our pre-pandemic normal. We wish you and your family a healthy and happy new year!
BY THE NUMBER$
LONG-TERM - The S&P 500 has gained an average of +10.9% per year (total return) over the last 50 years (i.e., 1971-2020). The index has been positive in 16 of the last 18 years. Over the long-term, the S&P 500 has been up during 40 of the last 50 years, i.e., 80% of the time (source: BTN Research).
JOBLESS - The lowest (3.5%) and the highest (14.7%) unemployment rates in the United States in the last 50 years (since 1970) both occurred in 2020, and they took place just 2 months apart (source: Department of Labor). 7
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Institute for Supply Management (ISM) Manufacturing PMI (Purchasing Managers Index).
Wednesday: Automated Data Processing (ADP) Employment Change, Factory Orders.
Thursday: Initial Jobless Claims, ISM Non-Manufacturing PMI.
Friday: Employment Report.
Source: Econoday, December 31, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Thursday: Micron Technologies (MU), Constellation Brands (STZ), Walgreens Boots (WBA), Conagra Brands (CAG).
Source: Zacks, December 31, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
THE WEEKLY RIDDLE
The railings on a 60-yard-long walkway have ornamental sculptures every 12 yards on both sides, starting at the east and west ends of the walkway. How many total sculptures are there on the walkway?
LAST WEEK'S RIDDLE: What number logically comes next in this series: 2, 3, 5, 9, 17, __.
ANSWER: 33. (The difference between the two numbers is progressively multiplied by 2 and added to the next number.)