Dow and S&P 500 Steady as Stocks Cap Blockbuster Year—and What Else Is Happening in the Stock Market on New Year’s Eve

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Happy New Years, readers of Baron.

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Brian R. Smith / AFP / Getty Images

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Stocks were stable in the final trading session of 2021, as major US indices were on track to close out one of their best years on record.

The Dow Jones Industrial Average fell 20 points, or less than 0.1%, as New York began trading. On Thursday, the index closed 90 points lower at 36,398, which was close to Wednesday’s record 36,488. The S&P 500 and Nasdaq both traded around flat.

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Overseas, London’s FTSE 100 ended the year with a 0.3% daily decline, while the Hang Seng index in Hong Kong closed the 2021 daily closing higher by 1.2%.

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It has, overall, been a tremendous year for stocks — and one for the history books. The performance of the S&P 500 in 2021 is in the top fifth since 1927, with the Dow in the top third year until 1896.

The past year has taken investors on a ride that has included a ‘meme-stock’ frenzy, the best bull run for oil prices in more than a decade, and a surprising rise in the value of cryptocurrencies like bitcoin, among other trends. .

“2021 has been a low volatility, high return year for the S&P 500. It is reminiscent of 2013 and 2017. Looking to 2022 (such as 2014 and 2018), we expect volatility to increase,” said Great Hill Thomas Hayes, president of Capital, told baron’s,

According to the data, the Dow and the S&P 500 are up 19% and 27%, respectively, over the past 12 months. This outperformance has come in a year defined by, among other things, supply-chain challenges, labor shortages, surprisingly strong corporate earnings, a torrent of central bank stimulus – triggered by slowing and creeping inflation.

“The defining feature of the markets in 2021 for me was the incredible flexibility of corporate earnings,” said Tom Essay, founder of Sevens Report Research. baron’s, “Specifically, how the massive increase in inflation remained positive for corporate earnings because it did not dampen demand, while corporate margins largely remained stagnant or, in some instances, expanded.”

Corporate resilience is an idea shared by many on Wall Street, including Heather Wald, vice president of Bel Air Investment Advisors, who highlighted that US companies will repurchase a record $1 trillion of their own stock in 2021. Did.

“The anticipated return to normalcy in 2021 fell short of expectations, as the highly transmissible Covid-19 variant continues to transform our everyday lives. However, US equity markets cleared major hurdles related to the virus,” Wald pointed out. baron’s, “With negative real interest rates on bonds and a lack of other compelling investment options, investors poured excess cash into stocks instead.”

Not much changed in the markets as investors headed towards New Year’s Eve – usually one of the quietest days of the year for the markets. Trading has eased during the holidays, including some of the lowest-volume days of 2021, as seasonality took charge. Stocks known as the Santa Claus Rally often do well at Christmas; The S&P 500 has been rising steadily since December 20, with a gain of 4.5%.

Crude oil prices fell slightly on Friday, along with stocks. Futures contracts for the international oil benchmark Brent were down about 1% at $79 a barrel, while US futures for West Texas Intermediate crude were similarly down from $76. were up.

Despite Friday’s fall, oil prices climbed more than 50% in 2021 amid rising demand for crude amid global energy shortages and a recovery in the economy from the Covid-19 pandemic. Analysts expect that to continue till 2022.

“Commodity prices will remain stable as product shortages are not going away,” said Jeffrey Haley, an analyst at broker Oanda. baron’s, “Supply-chain challenges and demand for a global recovery will push prices back. In this environment, Brent crude should reach $ 90 to $100 a barrel.

For the cryptocurrency, which has seen a decline over the past week, the last day of the year was proving to be a celebration. Bitcoin, the leading digital asset, rose nearly 1% to nearly $48,000, while the second largest crypto- ether- was similarly closer to $3,800.

“This week has been another volatile period for crypto,” said Marcus Sotirio, analyst at digital asset broker GlobalBlocks. “Bitcoin is bouncing back now.”

Moving into 2022, Sotirio expects more institutions to reallocate crypto in the first quarter of next year, adding that data shows this is already happening.

“About 10,000 bitcoins left Coinbase’s exchange in the past 24 hours – this happens when long-term investors (usually institutions) buy large amounts of bitcoins as they move bitcoins to a different storage location, The analyst said.

Bitcoin has climbed over 60% since early 2021, but is far from the highs of over $67,000 seen in November. Ether is up over 400% this year.

Here are three stocks trending Friday:

Chip group Advanced Micro Devices (ticker: AMD) rose 1.3%. The company announced late Thursday that it expects its acquisition of Xilinx (XLNX) to close in the first quarter of 2022 instead of later this year. Xilinx stock dropped 0.8%.

Peloton Interactive (Pton) fell 0.8% after market outperformed market performance at investment bank JPMorgan.

Write to Jack Denton at [email protected]

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