fell about 60 points on Friday, or 0.2%. That was a 19% increase this year. That Nasdaq
closed 0.6% and increased 21% in 2021, while S&P 500
, which fell 0.3%, rose 27% this year.
The Dow and S&P 500 closed the week in green … a festive Santa Claus meeting. And this is the third year in a row with increases for the Dow, S&P and Nasdaq, each of which is not far from record highs. In fact, the S&P 500 closed at a record high 70 times this year.
Optimism regarding the effectiveness of vaccines
however, helped boost investor enthusiasm, as did the firm hand of the Federal Reserve and other central banks, which have mostly promised to tread cautiously while looking to normalize monetary policy and slowly begin to raise interest rates.
That US economy
faltered slightly in the third quarter, with growth slows to an annual rate of only 2.3%
. Nevertheless, consumer consumption remains relatively strong, and the red-hot housing market remains a bright spot for the economy.
But investors will follow the Fed closely in 2022.
Traders are currently pricing a chance of more than 50% that the Fed will raise interest rates for the first time since 2018 at its March meeting, and that Jerome Powell & Co. will raise interest rates a total of three times next year to combat inflation
Investors will also look to Washington to see if there can be more stimulus from the White House and Congress following President Biden’s plan to pass a Build Back Better Act has hit a garden.
The market will also keep an eye on Covid cases to see if more companies will delay return to work plans or be forced to impose stricter restrictions such as mask and vaccine mandates.
The winners and losers
Home depot (HD)
and Microsoft (MSFT)
led the Dow this year, with each blue chip stock rising more than 50% in 2021. Oil companies Devon energy (DVN)
and Marathon (MRO)
were they best results in the S&P 500
, rising thanks to rising crude oil prices. Both shares have more than doubled.
Top technologies such as Apple (AAPL)
, Google Owner Alphabet (GOOGL)
and Nvidia (NVDA)
were also big winners.
Biotech Modern (MRNA)
, one of several manufacturers of Covid-19 vaccines, also thrived with more than 140%. Rivals Pfizer (PFE)
and BioNTech (BNTX)
increased by more than 60% and 215% respectively.
Leisure stocks, however, were big losers. Disney (HAZE)
was the largest dog of the Dow, falling nearly 15% this year. The company was hit by increased competition from Netflix (NFLX)
and others in streaming media.
Casino owners Penn National Gaming (PENN)
and Las Vegas Sands (LVS)
each fell about 40% and were the laggards in the S&P 500.
A slowdown in tourism, especially in Asia’s gaming mecca in Macau, and a fierce battle for customers in the burgeoning legal American sports betting market damaged casinos.