December stock markets rose on the early delivery of vaccines from science and a stimulus package from Congress, both essential for moving forward. Despite the pandemic and subsequent collapse of the economy, stocks recovered and moved forward in 2020. The major stock indices rose an average of 3.5 % in December and 12% over the year. Tech stocks continue to outperform other stock sectors, up 9.5% last month and over 100% for the year. The weighting of tech stocks in the S&P 500 boosted that index last year. Bonds were barely positive in December but returned 7% over the year.
Government stimulus is essential in a failing economy when consumers cannot spend. The economy is a balance of consumer spending and government spending. When consumers spend that is the main contributor to the economy and government spending is reduced. The Federal Reserve has been working to increase inflation since 2008 without much success, so a threat of high inflation is not strong now. The new bipartisan team of Powell as Federal Reserve Chair and Yellen as Treasury Secretary seems like a solid team to lead us forward.
Just in time this changing of the year. How unburdening it was to close the door on 2020. Whatever the new year holds, 2020 is behind us, sealed and delivered to history. Mostly our losses were small. Still we mourned them. Hope for this new year gives us wings, a lift forward. Travelling this road together we each have a different direction. Safe journeys.
