During the last trading week of 2020, all major U.S. markets set new record highs, posting gains of around 1%. Volatility was light over the shortened holiday trading weeks, despite continued gridlock in Washington D.C. over further COVID-19 relief.
It is difficult to fully fathom all the events of last year. Looking back over 2020, we endured a year that was disrupted by a pandemic and the end of the longest bull market in history. Record-setting unemployment and economic disruption drove fear and anxiety to new highs. Yet the market somehow ended the year on a positive note.
Annual returns were varied among different markets, with the Dow Jones posting a gain of approximately 6.5%, the S&P 500 gaining around 18%, and the NASDAQ growing by a scorching 44%.
Digging a little deeper, the story was very much about a few specific companies. For example, Apple, Amazon, and Microsoft combined to generate over half of the total return of the S&P 500 while the top 10 holdings of the index accounted for over 80% of the total return. We view this as positive news: the majority of companies remain poised to make their recovery, potentially over this year.