Market Commentary: Fourth Quarter

Market Commentary Q4 2020

Global markets have continued to recover from the panic of the initial COVID-19 pandemic as the anticipated vacines begin to be distributed.  The U.S. presidential election seems to be finalized, and that is one less thing the markets have to be uncertain about.  Markets consider uncertainty as a risk factor, and the more uncertain things are, generally the more volatility investors can expect.

Large companies represented by the S&P 500 Index have continued to climb, gaining 12.15% for the quarter and 18.4% for the year. Small companies represented by the Russell 2000 finally had a run, and grew by an amazing 31.4% for the quarter, ending the year with a 19.9% gain.  International stocks represented by the iShares MSCI EAFE Index also had a strong 4th quarter by increasing 16% for the quarter, and 7.8% for the year. The Federal Reserve has continued to indicate there will not be any interest rate increases in the foreseeable future, and The Barclays US Gov/Credit 1-5 Year Index was up 0.3% for the quarter, and 4.7% YTD.

Unemployment numbers which grew at an unprecedented rate from 4% to over 15% in one month’s time have now decreased to 6.7% according to the U.S. Bureau of Labor Statistics.  COVID-19 is still affecting our lives, with a large percentage of the workforce working remotely and school age children learning remotely.  Some sectors of the economy have higher exposure to government restrictions, such as our travel and dining industries, while big technology companies have thrived. 

Many people are thankful that 2020 is behind us – which really speaks to American optimism.  People and companies continue to innovate and create new opportunites for investment.  We expect there will be legislative changes in the upcoming years that may lead to recommended changes for investment and savings strategies.  Your Petersen Hastings advisor will work with you to make sure your investment strategies are sound, taking in consideration of any new legislation affecting retirement accounts and taxes.

From all of us at Petersen Hastings, we wish you a happy and prosperous 2021!

Petersen Hastings