A year ago today, there isn’t a soul on this planet who could have predicted the stock would be sitting where it is today. Exactly one year after stocks hit their year-to-date Covid lows, we’ve seen the likes of the Dow Jones, S&P 500 and Nasdaq have soared 76% 76% and 95%, respectively, hitting multiple record highs along the way, making the past 12 months one of the best 365-day stretches since World War II.
Somehow the market continues to defy all logic and reason, shrugging off historically high unemployment, a steep economic downturn, and, at the root of it all, a global health crisis claiming millions of lives – for large parts of 2020.
So how did the stock market crash at the onset of the pandemic recover in record time? The less obvious answer: some companies, including large-cap ones like Apple, Amazon and Microsoft were spared from the pandemic’s fallout and, if anything, even profited from it. The obvious answer: historic fiscal stimulus, which not only limited the drop in consumer spending but left many people unaffected by the crisis with cash to invest in the stock market. And ultimately, once it became clear that vaccines would be available sooner than originally expected, a sense of optimism spread like wildfire among investors.