A year ago, the US stock market hit rock bottom, with the S&P 500 reaching its target after a 34% dip in just 23 trading days.
At the time, few could have imagined the recovery the market has seen, including a record 34 index highs from last year’s lows. Despite a global pandemic that has killed nearly 550,000 people in the U.S., eliminated millions of jobs and restricted economic activity, stock market indices have risen to new highs.
Behind the impressive rally are a number of factors, including, initially, the Federal Reserve’s rapid emergency measures to support the financial markets and the economy. Those helped push U.S. stocks down from the 2020 low and initiated a leadership stretch sustained by growth and technology stocks. When investors re-stacked in the stock market last year, they acquired shares of companies that benefited from the pandemic. Unlike sectors such as energy and retail, which were suddenly faced with uncertainty, some analysts felt that technology stocks had great potential for growth.
Recently, however, this rally has stalled and has briefly sent the Nasdaq Composite to a major correction: a 10% drop from the recent high. Since the index’s recent record on Feb. 12, growth and technology stocks have had problems. Instead, other sectors have increased, including energy and finance.
The following graphs explain how the market has changed since February 12th.