Dow increases by approximately 200 points and reaches a record high to end an exhilarating 2020.

 

The Dow Jones Industrial Average and S&P 500 reached new record highs on Thursday, marking the conclusion of one of the most turbulent years in recent market history. The Dow closed with a gain of 196.92 points, equivalent to 0.7%, ending the day at 30,606.48. Meanwhile, the S&P 500 registered a 0.6% climb to 3,756.07, and the Nasdaq Composite saw a modest 0.1% advance to 12,888.28. All three major indices hit their peak levels with less than an hour of trading remaining. Intel led the Dow’s gains with a 2.2% rise. Financial and utility sectors each posted gains exceeding 1%, contributing to the S&P 500’s increase. Thursday’s market movements followed a positive report on U.S. weekly jobless claims, which exceeded expectations. The Labor Department reported 787,000 initial unemployment-benefits filers for the week ending December 26, compared to a Dow Jones poll forecasting 828,000. “While the improvement does not align with the narrative of increasing COVID restrictions… we must take it at face value,” noted Thomas Simons, a money market economist at Jefferies. “As for next week’s payroll data, they are still likely to be weak since initial claims increased between the December and November survey weeks, and continuing claims saw their smallest decline since June.”

The Unprecedented Market of 2020

Equities faced a sharp decline in February and March as the Covid-19 pandemic extended beyond China, leading to widespread lockdowns and a halt in economic activity. During this period, the S&P 500 experienced its fastest 30% drawdown in history. However, following a low point in late March and substantial interventions by the Federal Reserve to stabilize credit markets, stocks staged a remarkable recovery, reaching multiple record highs by the year’s end. These record-breaking milestones coincided with the distribution of several Covid-19 vaccines and a new economic relief package from Congress. The Nasdaq Composite, heavily concentrated in technology stocks, posted an impressive 43.6% gain for the year, its best performance since 2009. The S&P 500 concluded 2020 with a 16.3% increase, while the Dow rose by 7.3%. “This year has truly been unprecedented,” remarked Sam Stovall, chief investment strategist at CFRA Research. “We’ve never encountered anything like this before.” Despite the substantial gains, daily market volatility persisted throughout the year, keeping even seasoned investors on edge. The S&P 500 experienced daily swings of at least 1% on 110 of the 253 trading days in 2020, a notable increase from just 38 such days in 2019. Among these swings were two rallies exceeding 9% in March, along with a 12% drop in the same month.

Tech Sector Dominance

The technology sector emerged as the standout performer of 2020, surging more than 42% due to the pandemic-induced shift toward remote work. This transformation drove increased demand for cloud services and computer equipment. Consumer discretionary stocks also thrived, rising 32.1% as online shopping gained popularity. Amazon’s shares soared by 76.3% in 2020, while Etsy’s value quadrupled. Scott Wren, senior global market strategist at Wells Fargo Investment Institute, characterized 2020 as a “year of opportunity.” He stated, “The stock market offered investors multiple opportunities to put sidelined funds to work in 2020. The good news is we expect additional opportunities to present themselves in the New Year.”

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