What’s happening: US stocks closed at record highs on Thursday with the Nasdaq 100 adding a whopping 43.6% for the year.
What happened: The global financial markets remained highly volatile through 2020, with the pandemic causing significant uncertainties and triggering huge injections of funds from governments across the globe.
Despite the continued spike in covid-19 cases, Wall Street rebounded dramatically towards the end of the year, with major indices hitting record highs. Meanwhile, investors remained cautious about another variant of the coronavirus beginning to spread in some countries.
Why it matters: US equities declined sharply in February, as the covid-19 outbreak began spreading outside China, forcing governments to impose lockdown restrictions that resulted in supply disruptions and the closure of several businesses.
The S&P 500 recorded its fastest decline of 30% in history. US stocks started to recover in late March, after the Federal Reserve announced various measures to provide support to the credit markets. The stock market made record jumps with the rollout of covid-19 vaccines.
In 2020, the Nasdaq 100 recorded its strongest annual performance since 2009, with the pandemic forcing people to work and learn from home, which boosted demand for computers and cloud services.
While the Nasdaq 100 added close to 44% for the year, the S&P 500 rose 16.3% and the Dow Jones index ending 2020 with a 7.3% gain.
Consumer discretionary stocks surged strongly, adding more than 32% last year as more people started shopping online. The trend helped Amazon’s stock add more than 76% in 2020.
Although investors remained cautious amid light trading on Thursday, the S&P 500 and Dow Jones index climbed to all-time highs on the last trading day of the year.
Thursday’s surge came after the Labor Department reported better than expected data on weekly jobless claims. The number of Americans filing unemployment benefits declined for the first time in 2020 by 19,000 to 787,000 in the week ending December 26. Markets had been expecting a higher reading of 828,000.
The Dow Jones index surged 196.92 points, or 0.7%, to close at 30,606.48 in the prior session. The S&P 500 added 0.6% to reach 3,756.07, with the financials and utilities sectors gaining more than 1%. The tech-heavy Nasdaq 100 edged higher by 0.1% to settle at 12,888.28 on Thursday.
What to watch: Markets await data on manufacturing PMI and construction spending data from the US. The final reading of IHS Markit US manufacturing PMI is expected to decline slightly to 56.5 in December, versus 56.7 in November. Construction spending is projected to increase 0.9% in November, following a 1.3% rise in the prior month.
Investors may begin the first trading day of the new year on a cautious note, following Thursday’s spike. The downturn in US stock futures in the Asian session points towards a lower open on Wall Street today.