Clients & Friends:
While we know the turning of the digit from 0 to 1 didn’t change the alignment of the universe, December’s developments make it easier to approach the new year with a feeling of new possibilities. Vaccines are being distributed, the major market indices show between modest and stellar growth and some sectors of the economy most diminished by the pandemic are demonstrating strength.
For much of the year the story in equities has been about big technology stocks and then everything else – the tech-focused NASDAQ closed the year up 43%. Over the last couple months market strength has broadened, and December continued this trend with small-cap stocks, international equities and lagging sectors like Energy and Financials outperforming the average. The S&P 500 reported a smaller, but still surprisingly strong result through 2020 by gaining 15% value. International equities also ended the year trading at near all-time highs, as recorded by the MSCI EAFE index.
The ongoing pandemic is expected to dominate the economic outlook in the first part of the year, with continued restraint on consumer services. As vaccines are distributed, people should become more comfortable going out again. Activity in face-to-face industries, such as travel, hotels, restaurants and in-person entertainment, should pick up substantially in the second half of the year.
All the good news, of course, comes as COVID-19 continues to hold record high rates of cases and vaccinations are expected to continue into the middle part of the year. Though we may be at the beginning of the end, it’s still not the end.
We’re not out of the weeds yet, but there seems to be real momentum behind the market and an opportunity to potentially pick up value from stocks most tied to an economic recovery, as well as some possible stability from 2020’s top performers. Still, there is a good chance we’re going to see bumps in the road. If you’re looking for more information about recent market moves, dive in deeper here.
We are wishing you the best for this new year and, as always, thank you for your continued trust in us as we work toward your goals through 2021 and beyond.
Carlie Dugan, CFP®
Managing Partner, Cornerstone Financial Partners LLC
Financial Advisor & Branch Manager, RJFS
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