Stocks posted small losses in the last trading session of 2021, but the major U.S. indexes closed out one of their best years on record.
Still, the S&P 500 finished 2021 up 27%, completing its best three-year stretch since 1999. The Dow was up 19% on the year, while the Nasdaq gained 21%. Over the last three years, the S&P 500 is up 90%.
ended the year with a 0.3% daily decline, while in Hong Kong the
Hang Seng Index
closed 2021 with a Friday gain of 1.2%.
The S&P 500’s performance in 2021 lands in the top fifth of years dating back to 1927, with the Dow placing in the top third of years as far back as 1896.
The past year has taken investors on a ride that included “meme-stock” frenzies, the best bull run for oil prices in more than a decade, and a stunning surge in the value of cryptocurrencies such as Bitcoin, among other trends.
“2021 has been a low volatility, high return year for the S&P 500. This is reminiscent of 2013 and 2017. Looking forward to 2022 (like 2014 and 2018) we expect volatility to pick up,” Thomas Hayes, the chair of Great Hill Capital, told Barron’s.
The market’s strong performance in 2021 came in a year defined by, among other things, supply-chain challenges, labor shortages, surprisingly strong corporate earnings, a torrent of central bank stimulus—which has begun to slow—and creeping inflation.
“The defining characteristic of markets in 2021 for me was the incredible resilience of corporate earnings,” Tom Essaye, the founder of Sevens Report Research, told Barron’s. “Specifically, how a huge spike in inflation ended up being positive for corporate earnings as it didn’t reduce demand while corporate margins largely held firm or, in some instances, expanded.”
Corporate resilience is a view shared by many on Wall Street, including Heather Wald, vice president at Bel Air Investment Advisors, who highlighted that U.S. companies repurchased a record $1 trillion of their own stock in 2021.
“The anticipated return to normalcy in 2021 fell short of expectations, as highly transmissible Covid-19 variants continued to alter our everyday lives. U.S. equity markets, however, shrugged off major virus-related headwinds,” Wald told Barron’s. “With negative real interest rates on bonds and a lack of other compelling investment alternatives, investors instead poured excess cash into stocks.”
Not much was changed in markets on New Year’s Eve—typically one of the quietest days of the year for markets. Trading has been subdued over the holidays, which has included some of the lowest-volume days of 2021, as seasonality took charge. Stocks often do well over Christmas in what is dubbed the Santa Claus rally; the S&P 500 has been on a steady rise since Dec. 20, gaining 4.5%.
Crude prices were down Friday. Futures contracts for international oil benchmark Brent were down 2.2% to $77.78 a barrel, while U.S. futures for West Texas Intermediate crude were falling 2.3% to $75.21.
Despite Friday’s decline, oil prices have risen more than 50% in 2021, supported by a global energy shortage and soaring demand for crude as economies around the world roared back from the depths of the Covid-19 pandemic. Analysts see that continuing into 2022.
“Commodity prices will remain firm as product shortages aren’t going away,” Jeffrey Halley, an analyst at broker Oanda, told Barron’s. “Supply-chain challenges and global recovery demand will backstop prices. Brent crude should make its way towards $90-$100 a barrel in this environment.”
For cryptocurrencies, which have seen declines across the past week, the last day of the year was proving to be much of the same. Bitcoin, the leading digital asset, fell 2.9% to $45,892.
“This week has been another volatile period for crypto,” said Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. “Bitcoin is now bouncing back.”
Heading into 2022, Sotiriou expects more institutions to reallocate to crypto in the first quarter of next year, and said that data suggest this is already happening.
“Almost 10,000 Bitcoin left
‘s exchange over the past 24 hours—this occurs when long-term investors (typically institutions) buy a large amount of Bitcoin, as they transfer the Bitcoin to a different storage location,” the analyst noted.
has climbed more than 60% since the beginning of 2021, but remains off highs above $67,000 seen in November.
Here are three stocks on the move Friday:
Advanced Micro Devices
(ticker: AMD) was up in morning before paring the gains for a loss of 0.9% The company announced late Thursday that it expected its acquisition of
(XLNX) to close in the first quarter of 2022 instead of by the end of this year. Xilinx stock dropped 0.9%.
(PTON) fell 3.9% following a downgrade from Market Outperform to Market Perform at investment bank JMP. The stock ended 2021 down 75%
Write to Jack Denton at email@example.com