Quincy Krosby, chief market strategist at Prudential Financial, does not hold back in describing 2020 on Wall Street: "a year of extreme extremes."
From the start of the coronavirus pandemic that sent stocks crashing, to their resurgence after the approval of vaccines holding the best hope for eradicating the disease, here’s a look back at the year in US stocks:
After a rather quiet January and February, Wall Street suddenly collapsed in March, frightened by the arrival of Covid-19 and its consequences for the world’s largest economy. The major New York indices took on water, with the Dow Jones Industrial Average experiencing its third-worst session in history on March 16, with a 13 percent fall that was exceeded only by the 1929 Great Depression and the 1987 crash.
That marked Wall Street’s transformation into a "bear" market -- meaning it had declined more than 20 percent from its recent highs -- as investors grappled with fears of a paralyzed American economy and a liquidity crisis.
"If companies cannot raise money to survive, they go bankrupt, they lay people off, the unemployment rate skyrockets," Krosby said. But the malaise didn’t last long. Traders found a second wind when the Federal Reserve launched a massive asset purchase program and cut its lending rate to zero, and when Congress passed a huge stimulus package later in March.
Wall Street’s recovery continued in the spring and intensified over the summer, with the market in August nearing its pre-pandemic levels. Driving this growth were tech giants, which experienced a meteoric rise: between April and September the share prices of Facebook, Amazon, Microsoft, Apple and Google parent Alphabet climbed, with the iPhone manufacturer gaining more than 80 percent.
The "rationale behind going into the mega-cap tech companies was that these were known companies, they were the best of breed and their goods and services were in demand," Krosby said.
Other companies saw their fortunes boom because of the pandemic, including video conferencing platform Zoom, which spiked in popularity. Companies selling cleaning products to virus-wary consumers, like Clorox and Procter & Gamble, as well as food companies like Hormel and Hershey, have also gained.
Small investors, many of whom found themselves at home with lots of time on their hands, also made their presence known in the markets, pushing up the shares of fashionable companies like Tesla.
But sectors most dependent on the overall health of the economy suffered, including cruise lines, casinos, hotels, airlines and oil majors. By the end of July, the United States was in a recession, and tens of thousands of people had died from the virus.
