After experiencing the "roller coaster" market in 2020, the overall trend of US stocks in 2021 is slightly stable, but it is still impressive. Looking back on the whole year, "callback" and "hitting a new high" seem to have become the main melody of the U.S. stock market. It can be said that this year, the U.S. stock market has continuously hit new highs in a series of short pullbacks and callback forecasts.
On the whole, despite the baptism of political turmoil, economic stimulus, the havoc of covid-19 variant, high inflation and the transformation of the Federal Reserve into an eagle, the U.S. stock market has made proud achievements in 2021. The three major U.S. stock indexes continued their crazy rise last year and reached new highs in 2021.
In particular, the S & P 500 index, according to the data, has reached 66 record highs since the beginning of 2021, and it is very rare that it is refreshing every month. If the S & P 500 index can continue to hit a new high this month, it can achieve the achievement of "hitting a new high for 12 consecutive months", which will be a perfect 12 months and the only year to complete this amazing feat since 2014.
U.S. stock market "master"
In the post epidemic era of 2021, although there are still Delta and Omicron variants of covid-19 virus raging around the world, with the popularization of vaccines, the pace of economic recovery in the United States has never stopped. Although the macro environment has not fully recovered to the level before the covid-19 epidemic, the US stock market is still strong.
Therefore, throughout 2021, the covid-19 epidemic is still not the main factor dominating the trend of the US stock market. The expectations of "high inflation" and the Federal Reserve's "weight reduction and interest rate increase" have become the main melody of market changes this year. In addition, as the impact of technology giants on US stocks becomes more and more obvious, the market also focuses on the performance of this market vane.
From the perspective of the three indexes, although there was a correction for a time, US stocks generally showed a shock upward trend. From the perspective of individual stocks and sectors, there were signs of weakness in U.S. technology stocks in the first half of this year. Under the background of economic recovery, traditional value stocks and cyclical stocks once led the rise. Therefore, energy, steel and other stocks rose strongly, while the gains of high valuation growth stocks such as apple and Tesla were suppressed.
Specifically, in the first half of this year, the biggest winner among the major sectors of US stocks was undoubtedly "energy stocks". With the global gradual promotion of covid-19 vaccination, many countries in Europe and the United States gradually began to liberalize the blockade, the demand for bulk commodities picked up, especially the rapid rise in energy demand. Brent crude oil became the best performing asset in the first half of the year, with a yield of 44.32%.
In this context, the top gainers of US stocks are mainly occupied by oil and gas, shipping, steel and other sectors. According to FTU data, in the first half of the year, the U.S. oil and gas industry sector led the major sectors, while among the constituent stocks of the S & P 500 index, four of the top five stocks with the largest increase in the first half of the year were energy stocks.
But soon, driven by the soaring performance of large technology companies, large technology stocks continued to be the main driving force in the second half of the year. However, the trend differentiation within technology stocks is also more obvious. On the one hand, large-scale technology stocks rose in a "tight" manner, driving the index to new records; But on the other hand, growth stocks have ushered in a sharp correction, including many star stocks that made great achievements last year, such as zillow, roku, pinterest, zoom, etc.
Therefore, Cathie wood, who has become famous on Wall Street in recent two years and won the reputation of "bull market Queen", also changed from a "money tree" to a "money burning tree" in the second half of the year. Her flagship fund ark innovation ETF (arkk) has become the main target of short selling in the market and is sinking rapidly, and she herself is facing the most severe trust crisis since she became famous.
The reason is actually very simple. The words and deeds of the Federal Reserve have always been the wind vane on the way forward for US stocks. In the second half of 2021, the sensitivity to the trend of interest rates led to the differentiation of science and technology stocks. The science and technology giants with high growth momentum are still favored by capital, while the rest can only follow the jungle law of "survival of the fittest".
At the end of the year, with the birth of the concept of "meta universe", Facebook took the lead in changing its name to "meta". Technology giants entered the "meta universe" track one after another, and 2021 became the first year of "meta universe". It added another fire to the rise of large technology stocks.
performance of sectors and individual stocks
Data show that as of mid December this year, a total of 4023 U.S. stocks rose and 3217 stocks fell. Among them, 361 shares doubled, or more than 100%. Among companies with a market value of more than $10 billion, 683 stocks rose and 194 stocks fell. There are 29 companies with an annual increase of more than 100%, that is, the share price of 29 stocks has doubled this year.
As for the sector, although the technology industry is the focus of investors throughout the year, in fact, the energy sector is the biggest winner this year. According to the performance of S & P industry indexes, as of December 24, the energy sector ranked first among the major sectors, with a cumulative increase of 46.21% so far this year. The real estate sector rose 36.8%, ranking second, followed by the technology sector, which rose 32.73%. In addition, finance, health care, non essential consumer goods, industry and so on also rose very much.
It is no surprise that the energy sector can stand out. Since this year, inflation and economic recovery have promoted the soaring prices of natural gas, oil and coal. US President Biden has also actively promoted the large-scale infrastructure plan, and the shares of energy and steel related companies have jumped to a high point in 2021. Among them, Devon Energy, Continental energy and Marathon Oil ranked among the top three, rising 182.98%, 174.07% and 137.30% respectively.
In addition, in the context of high inflation, investors have turned to anti inflation sectors such as energy, finance and real estate to seek refuge. Therefore, the performance of the real estate sector this year is also very bright. Needless to say, the science and technology sector has always been a "sweet cake" in the eyes of investors. Among the information technology sector and individual stocks worth more than US $50 billion in the US stock market, NVIDIA, maywell technology and applied materials ranked among the top three, rising 130.28%, 80.28% and 71.99% respectively.
It is also worth noting that the "retail investors hold together to force the air on Wall Street" event staged by US stocks at the beginning of this year. At that time, many US retail investors gathered at reddit's Wall Street bets and other forums to raise the share prices of AMC, Gamestop and other companies several times in a short time. Wall Street bears left sadly after being hit hard. As of press time, the game station has increased by 782% so far this year, and AMC has increased by nearly 1320%.
Star stock performance
From the performance of popular stocks in U.S. stocks, chip stocks are the biggest winner in technology bull stocks in 2021. The most noteworthy is the Star stock NVIDIA. Although the supply chain interruption caused by the epidemic has caused problems to many industries, such as automobile manufacturers and consumer electronics companies, it is actually beneficial to chip manufacturers such as NVIDIA.
NVIDIA's share price has soared 126% this year, hitting 55 record highs in the year, and has increased by 455% since the beginning of 2020. Applied materials, which are also chip stocks, also performed well, followed by an annual increase of nearly 72%.
NVIDIA has actually established itself as an industry leader. Among the top 10 supercomputers, 8 are NVIDIA's computing platforms; In terms of supercomputer accelerators, NVIDIA has a market share of more than 90%. These figures prove the company's leading position in the field of data center. The company's management predicts that the size of this market will reach $100 billion by 2024.
In addition, faang (Facebook, apple, Amazon, Netflix and alphabet), the "five giants" of technology stocks known to the market in recent years, still performed strongly this year and achieved significant growth, especially apple. After rising by 80% in 2020, Apple has risen by about 30% this year. By contrast, the S & P 500 index is up about 27% this year. In particular, the continuous rise at the beginning of this month directly made its market value close to $3 trillion.
On the other hand, it is worth noting that these five giants are turning into "six giants" Mamata (Microsoft, apple, meta, Amazon, Tesla and alphabet). The "market value first" competition between Microsoft and apple is also worth mentioning. At the end of October, under the performance contrast released by the two giants and the hot concept of "meta universe", Microsoft's share price rose sharply and finally regained the title of "the world's most valuable listed company". But in less than a month, apple, which was favored by the automobile R & D project, once again overtook Microsoft.
As for Tesla, which soared 656% last year, despite the constant turmoil, it still performed well in the east wind of the new energy vehicle concept, up more than 46% so far this year. However, at the end of the year, Musk's wave of "stock selling and cash out" operations really surprised the market, resulting in a sharp decline in share prices and a market value of less than $1 trillion. Fortunately, musk said that he had "sold enough" in the end. In addition, there was good news from Tesla's Berlin super factory project, which had been stagnant for a long time because of the failure of environmental protection approval. The share price rose for three consecutive times, and the market value returned to above $1 trillion.
outlook 2022
2021 has entered the countdown, "where will U.S. stocks go next year" is undoubtedly the most concerned issue for investors. Before that, investors should first clarify what kind of environment US stocks will face after entering 2022.
On the one hand, the Fed will accelerate debt reduction in order to suppress inflation, and it is imperative to raise interest rates. The Omicron variant that has recently ravaged the world, coupled with the Christmas holiday, I'm afraid the epidemic in the United States will usher in a new surge. There are signs of easing the imbalance between supply and demand in the supply chain, but under the trend of large increase in demand, it will take some time for the supply side to recover. Therefore, covid-19 epidemic prevention and anti inflation remain the market theme in the first quarter of 2022.
On the other hand, the termination of subsidies and assistance did not significantly affect the growth of consumer credit scale, and U.S. state governments are starting to attract re employment. It is expected that the job market will be positive. The prospect of economic recovery is becoming clearer and the market sentiment has picked up. The Fed actively controls inflation, which is expected to help the economic repair process. The pro cyclical sector has received a large inflow of funds, and the repurchase activities of listed companies have rebounded strongly, which is expected to help the upward trend of the index market.
How do Wall Street bosses see the trend of US stocks next year? As always, the views of Wall Street institutions are polarized. Many people believe that the US stock market is still in the early stage of the bull market. However, the bearer thinks that the US stock bubble has been very large and is at risk of being disillusioned at any time.
However, according to the reports released by major institutions, most of them are bullish, of which Goldman Sachs and JPMorgan Chase are the most optimistic. In the face of the two major risks next year, "the Federal Reserve raises interest rates" and "Omicron variant", Goldman Sachs twice issued a report in December saying that next year, the U.S. stock market will "remain bullish", and gave the highest target price of 5100 points to the S & P 500 index.
For the headwind of the Fed's interest rate hike, Goldman Sachs strategist David kostin commented that although he expected the fed to raise interest rates next year, the real interest rate will remain at an all-time low. In terms of stock returns, the continuous growth of profit margin will exceed any adverse impact of the interest rate hike.
"Although the real interest rate is rising, it will still be negative, and the stock allocation of investors will continue to reach an all-time high," he wrote in the report. "Corporate profits will increase and boost stock prices. The bull market in the stock market will continue."
JPMorgan Chase also predicts that the S & P 500 index will reach 5000 points in the first half of 2022, which may rise another 6% from the current level. Marko kolanovic, a quantitative expert at Xiaomo, expects the stock market to continue to rise next year. "We will continue to see stock upside, better than expected earnings growth, improvement in China / emerging markets and normalization of consumer spending habits," he said
Wilmington trust, one of the top ten trust institutions in the United States, is optimistic about 2022. Inflation will normalize, supply chain pressure will ease, and labor market participation will pick up.
The bearer is convinced that the market bubble is serious, and next year's series of headwinds will make it difficult to continue the bull market. Michael Hartnett, chief investment strategist of Bank of America, said in his report that it will be difficult for them to be bullish on US stocks in 2022. He warned that the biggest risk in the coming year is "the mother of the bubble of encryption and technology."
Mike Wilson, chief investment officer and chief U.S. equity strategist of Morgan Stanley , believes that the Fed's tightening (fire) and growth slowdown (ice) may sing a "song of ice and fire" in 2022, hoping that investors will be fully aware of the risk of slowing economic growth.
Overall, Wilson believes that the impact of Fed tightening and economic growth slowdown on US stocks may be worse than most people expect. Therefore, he believes that investors should take defensive measures against their equity positions, be vigilant against speculative stocks, and pay attention to defensive assets with stable profits, such as medical care, REITs and consumer necessities.
Finally, taking history as a mirror, some analysts concluded that even if it has risen for three consecutive years, the main stock indexes (70%) can still reap another year of positive earnings. This has been supported by historical trend data in the past 50 years since 1971:
1。 The Dow has risen for three consecutive years for four times, three of which have expanded three years to four years (accounting for 75%).
2。 The S & P 500 index rose for three consecutive years seven times, three of which continued into the fourth year (accounting for 43%).
3。 The Nasdaq composite index rose for three consecutive years five times, four of which continued to the fourth year (accounting for 80%).
(Financial Associated Press)
