Todd’s Take on the Market

In contrast to the first six months of 2020, markets saw strong growth in the back half of the year, bringing year-to-date returns into positive territory as 2020 came to an end. Investors looked past the continued spread of COVID-19 and instead focused on a combination of unprecedented monetary and fiscal stimulus, as well as positive news on vaccine development and distribution. Small-cap U.S. equities led the way, delivering a 20.0% return (for the quarter), a sharp reversal from the first quarter when it was the worst-performing style. Large-cap U.S. stocks slightly underperformed vs. small cap, rising 18.4%, and international equity markets showed signs of life as well, with developed markets ex-U.S. up 8.3%.

Despite all the trials and tribulations that we went through, the S&P 500 finished up 18.4%, the Dow 9.7% and the NASDAQ a whopping 44.9%. Nobody saw that coming—nobody.

Economic news continues to trend down, yet jobless claims were better than expected. Most likely due to people falling off the radar.

In 2021, who knows, but we do know there will be changes to fiscal policy, monetary policy and they will have a big impact on what the markets do.

So, stay tuned and we will keep you posted—Happy New Year!

Todd Day, MBA

Portfolio Manager
Horizon Financial Services, LLC

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