(BFM Bourse) – The S&P 500 chained records last year, at the rate of one every four sessions on average, and recorded an annual gain of close to 27%. For once, the broad index has done better than the Dow Jones and the Nasdaq Composite – a rather encouraging configuration if one relies on historical precedents (remembering that past performances do not predict those to come).
In 2021, the S&P 500 has had an extraordinary year in many ways. Despite the health concerns with the prolongation of the pandemic (admittedly mitigated by the immunization, vaccine or not, of part of the population and the drop in mortality compared to the first wave) and the confirmation of the coming monetary tightening , this index, considered the most representative of the American market of which it covers approximately 80% of the total capitalization, climbed by 26.89% last year. This is his third straight year of progression – and moreover with double-digit payoffs every time.
In three years, the level of the broad index has more than doubled. The past year has been particularly rich in records, the index improving 69 times its previous peak: in other words, compared to the number of sessions in the year, nearly one in four sessions in 2021 ended in a new record!
The movement was also quite widespread. For the first time this century, all 11 sectoral subdivisions (Energy, real estate, IT, financials, health, basic materials, consumer discretionary, communication, industry, basic consumer good and utilities) experienced a increase of at least 10%.
According to an estimate by BFM Bourse, only 23 stocks finished last year in the red, or less than 5% of the sample. The worst performance was recorded by Penn National Gaming, a value that was driven in 2020 by the assumption of an influx of players to online betting and gaming sites during periods of lockdown. In reality, this influx has not been confirmed and the title lost 40% in 2021.
6 previous only
On the contrary, around ten securities making up the S&P 500 have doubled in value or more. The largest increase, Devon Energy Corporation, even almost tripled (+ 178%), just ahead of another oil company, Marathon Oil (+ 146%), showing that hydrocarbons, despite the imperative of energy transition, have not said their last word.
With this gain of nearly 27%, the S&P 500 has beaten (or outperformed to use stock market jargon) as well as its younger brother, the Nasdaq Composite index (+ 21.39%), which reflects the health of new technology companies. like digital technology or biotechs, than its predecessor, the venerable Dow Jones Industrial Average (+ 18.73%).
This is only the sixth time in history that the S&P 500 has finished first in the trio of major Wall Street indices, after 1984, 1989, 1997, 2004 and 2005. The gap in its favor is the highest since 1997 .
If the sample is limited, it must be recognized that this configuration was, for the previous six, heralding new gains for the following year. On average over the years 1985, 1990, 1998, 2005 and 2006, the S&P 500 gained 12.6% …
Another encouraging sign, every time the index has climbed 20% or more, the following year has always been positive – this case having happened nine times in history. It should be remembered, however, that past performances do not predict those to come.
Guillaume Bayre – © 2022 BFM Bourse