First of all, a Happy New Year, and I hope this Market Commentary finds you smiling, in good health, and being in a very optimistic way of life - So live not in fear, but in faith, in 2021, we will breathe in the most exciting times this planet has ever seen - be happy.
The large-capitalization indices set new record intraday and closing highs in the final week of 2020. The broad S&P 500 index and DJI Average increased by 1.4%, and the tech-heavy Nasdaq Composite gained a small 0.7%. The small-cap Russell 2000 index pulled back hastily from record postings territory with a hefty 1.5% drop.
Beyond momentum, which could be said was the chief driver for the market, being helped this week with President Trump signing the disputed $900 Billion omnibus and stimulus spending measure. The United Kingdom approving the AstraZeneca and Oxford COVID-19 vaccine for emergency treatment and awaited Brexit. Neither news was particularly unexpected, though the stories were good enough for sentiment reasons.
Ten of the eleven S&P 500 sectors participated in the advance. The consumer discretionary sector with +2.0%, communication services, financials, and health care sectors gained +1.9% each, and the utilities sector with +2.5% outperformed the benchmark index. The vital energy sector with -0.4% was the lone die-hard loser and concluded the year with a whopping 37.3% decline.
It was no surprise; the market was not disturbed by Senate Majority Leader McConnell announcing that the $2,000 stimulus checks have "no realistic path" to pass in the Senate promptly. However, it could be retaken in the new Senate in January, though that is a topic for 2021.
It's also worthy of mentioning that the S&P 500 index finished the year with a respectable 16.3% yearly gain compared to the DJI Average of +7.3% but much less than the Nasdaq that posted +43.6% and the small-cap Russell 2000 index with +18.4%.
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Meanwhile, in the bond market, U.S. Treasuries moved insignificantly higher, stretching the uptick seen from the prior session. As a result, the Ten-year benchmark note yield settled lower one basis point (which flows as opposed to its price) to close at 0.92%, moving down below 100 basis points for the turbulent year.
Within overseas trading, equity markets across the Asian-Pacific zone delivered another no great shakes performance on Thursday, with many markets closed down for New Year's Eve. Mainland China's Shanghai Composite Index climbed by 1.7%, while Aussie's S&P/ASX 200 Index fell by 1.4%.
The significant European stock markets went sharply lower in a shortened session, as all the German markets were closed on Thursday. While the United Kingdom's FTSE 100 Index dived 1.5% and the French CAC 40 Index slumped by 0.9%.
Bitcoin is way up, and the gold and silver market are up for the year as well. What's going on here? Is this the twelve-month cycle the U.S. Dollar collapses and plunges in a big way because of all the money being printed and election turmoil? The U.S. Dollar is being off more than 5% following the election in America. Will the big plunge strengthen in 2021? - Stay tuned.