Are you interested in a little trip down the stock market's memory lane?
Remember the frightening drop in the stock market that bottomed out on March 23, 2020? That day, the S&P 500 hit an ominous low. Yet, since then, the stock market has been on a pretty impressive upward climb. It may have been a rollercoaster ride, but the results have been impressive. The S&P 500 has climbed with double-digit annualized returns and is up over 100% in total as of 3/25/2024.
Top Performing Sectors
We've seen a few sectors that have been flexing their muscles in this uphill climb. Technology has been stealing the show. With remote work and digital connectivity skyrocketing, is it any surprise? Software companies, social networking sites, and cloud-based services have received quite a boost!
Following closely behind, consumer discretionary sectors have made a mark, buoyed by folks adapting to quarantine life and shifting their spending habits. Things like home improvement projects, online shopping, and even a healthier interest in fitness equipment bolstered this climb.
There's also the energy comeback story. After a bruising 2020, the sector has been rebounding since 2021, helped by an improving economic landscape and rising oil prices.
Worst Performing Sectors
However, not all sectors were participating in the party. Unfortunately, utility and commercial real estate sectors took the brunt of the hit. With more people bunkered at home, commercial properties took a nosedive.
Looking forward
With COVID fears subsiding, things seem to be looking a tad brighter. Economies are reopening, people are slowly getting back to their pre-pandemic routines, and investors are cautiously optimistic.
And talking about optimism, the Federal Reserve's 'dovish' policy, hinting it's not in a rush to hike interest rates or taper bond purchases, is another reason for the markets to cheer.
While there are always risks to the economy and the markets, including the Middle East and the possibility of an escalation, a presidential election, and the possibility of a recession (albeit a shrinking possibility), we think that this scenario generally translates to a favorable environment for stocks and bonds, at least in the short term.
Conclusion
So, what's the takeaway? For those of you who thought the markets would not recover in your lifetime…good news. As it’s always done, they did recover and then some.
Disclosure
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Indexes are unmanaged and cannot be invested in directly.
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