Stocks rallied in December, fueled by the rollout of multiple COVID-19 vaccines and the signing of a new fiscal relief bill.
The Dow Industrials gained 3.3 percent while the S&P’s 500 Index rose 3.7 percent. The Nasdaq Composite, which led all year, added 5.7 percent.[i]
Investors managed through crosscurrents of news on the pandemic, from rising infections and new lockdowns to vaccines’ rollout.
Much like November, stocks rallied when Congress made progress on the new fiscal stimulus bill and pulled back as talks seemed to stall.
After some posturing, President Trump signed the stimulus package, which helped stocks move higher in the final week of trading.
After the November election, markets rallied due to initial tallies that seemed to point to a potentially divided government, which historically has been a positive for the equity markets.[ii]
[i] The Wall Street Journal, December 31, 2020. The Dow Jones Industrial Average is an unmanaged index generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. The Nasdaq Composite Index is an unmanaged index that is considered representative of small-capitalization companies. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
[ii] HartfordFunds.com, October 2020. “The Election and Your Portfolio.”