2020 was one of the most dramatic years in the history of investing as the coronavirus pandemic accelerated key trends in the stock market.
|2020’s Top Performers in S&P 500|
|L Brands (LB)||+110%|
The rise of electric cars was a huge breakthrough. Tesla (TSLA) led the charge by rallying more than 700 percent, muscling its way into the S&P 500. Smaller Chinese rival Nio (NIO) ran even more as investors embraced “ESG” portfolios.
On the flipside, traditional energy companies had one of their worst years ever. They were already struggling with excess crude-oil production before the pandemic, and then crashed violently when travel restrictions took effect.
Social lockdowns also hammered the economy, triggering the worst contraction since the Great Depression. Congress and the Federal Reserve responded with unprecedented supports. The U.S. dollar slid to its lowest levels in 2-1/2 years, while Chinese stocks exploded higher.
Quote of the year: "We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security. We are working alongside customers every day to help them adapt and stay open for business in a world of remote everything." -Microsoft CEO Satya Nadella, April 30, 2020.
Remote work, video conferencing and cloud computing characterized the new social and economic order. S&P Dow Jones Indices responded by adding Salesforce.com (CRM) to the Dow Jones Industrial Average and removing Exxon Mobil (XOM). A 21-year-old software company replaced an oil-and-gas giant dating back to 1870.
|Worst Performers in S&P 500|
|Occidental Petroleum (OXY)||-57%|
|Norwegian Cruise Lines (NCLH)||-56%|
|Marathon Oil (MRO)||-50%|
In another testimony to the rise of e-commerce, Etsy (ETSY) was the S&P 500’s second best performer in 2020. Like TSLA, it also joined the index this year.
In conclusion, 2020 was a year of major changes — socially and economically. These upheavals were especially present in the stock market. It could be worth studying the new trends, which may dominate the investing landscape for years into the future.
(All returns in this story as of Wednesday, December 30.)
This article was written by David Russell, TradeStation Securities, Inc., part of the Monex Group Inc, published on 31/12/2020.
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.
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