US stocks end banner year near their peak

US stock markets closed near record highs in light trading on Friday, the last trading day of 2021, marking the second year of recovery from a global pandemic.

All three major US stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999.

The S&P 500 gained 27 percent since the last trading day of 2020. Through Thursday, the benchmark index has registered 70 record-high closes, or the second-most ever. Using Refinitiv data back to 1928, the most record-high closes for the S&P 500 in a single year was 77 in 1995.

The Dow added 18.73 percent for the year, and the Nasdaq gained 21.4 percent.

Companies, consumers and the broader economy largely thrived in 2021 as they felt their way forward amid a constantly shifting landscape including a tumultuous transfer of power marked by the Jan. 6 Capitol riot. Other factors included the “meme stock” phenomenon, new Covid-19 variants, a labour shortage, generous fiscal/monetary stimulus, hobbled supply chains, booming demand and the resulting price spikes.

“What stands out to us this year among all the negatives, is the resiliency of Corporate America,” said Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina. “In a sea of uncertainty and higher prices, you have to be extremely impressed by how agile and adaptive Corporate America was to sport 45 percent earnings growth in a very difficult year.”

Indeed, earnings results from S&P 500 companies blew past analyst estimates to deliver year-on-year growth in the first three quarters of the year of 52.8 percent, 96.3 percent and 42.6percent, respectively, according to Refinitiv, which currently sees fourth-quarter annual earnings growth of 22.3percent.

Energy, real estate and microchips, sectors associated with economic recovery and booming demand, were among 2021’s top performers, with growth stocks’ 31 percent advance handily outperforming the 22 percent gain in value stocks.

Market-leading tech and tech-adjacent megacap stocks, which outperformed the broader market in the first year of the global health crisis, were laggards as the economy slowly reopened and vaccines were deployed.

Steadily rising Treasury yields – along with a recent hawkish shift from the Federal Reserve, which now foresees as many as three rate hikes in the coming year – have supported interest rate-sensitive financials which gained nearly 33 percent.

The Covid-19 pandemic, which burst onto the scene in early 2020 and prompted the steepest, quickest economic contraction in history, continues to linger, pressuring travel-related stocks.

The Dow Jones Industrial Average fell 0.2 percent to 36,338, the S&P 500 lost 0.3 percent to 4,766 and the Nasdaq Composite dropped 0.6 percent to 15,644.

Volume on U.S. exchanges was 7.6 billion shares, compared with the 10.55 billion average for the full session over the last 20 trading days.

The S&P 500 posted 47 new 52-week highs and no new lows; the Nasdaq Composite recorded 58 new highs and 143 new lows. (Reuters)