Get updates on recent capital market data and trends, including possible expectations for future outcomes.
Many people were eager to put 2020 behind them and look at with hope to better times. The new year brought resolution of some political uncertainty, but many of last year’s question marks remain.
The 12 months following the pre-pandemic market peak have been unlike any previous period for stocks on record. On average, stock performance has been negative one year after a bear market peak, but this time stocks gained 16% since the pre-pandemic peak in February 2020.
As we pass the anniversary of last February’s market peak, the pace and strength of the bull run continues to impress observers. The S&P 500® Index has gained 75% from the March low, the best start to a bull market since the 1930s, per Bloomberg. This represents more than half of the median return from the 13 previous bull cycles at 126%.
Recent inflation figures are still below the Federal Reserve’s target level, but expectations for higher inflation is rising due to proposed stimulus measures and infrastructure spending. A jump in inflation could lead to a shift in Fed monetary policy and potentially bring the current stock rally to an end.
The impact of the ongoing COVID-19 restrictions continues to affect economic activity, while mobility data shows how far off the economy remains from its pre-pandemic levels. The long-term impacts are still uncertain, making business planning extraordinarily difficult.
The economic recovery hit a soft patch in recent months due to renewed COVID-19 shutdowns, but a drop in positive cases and wider availability of vaccines should help the expansion accelerate.
