Despite the unprecedented challenges that rocked the year 2020, the S&P 500 closed with an 18.4% gain on a total return basis.
Earlier in the year, the pandemic had sent the stock market into shock, driving the S&P 500 to an 8.4% decline in February. It sank further in March, shedding 12.5% as the economy virtually shut down globally.
According to the research data analyzed and published by Comprar Acciones, the March decline brought to an end the index’s 11-year bull-run, albeit briefly. In April, it jumped by 12.7% and kept up the uptrend for the rest of the year. By August, it had recovered all losses and embarked on setting new highs.
For the latter part of the year, the index hit record courtesy of a handful of big stocks. Its close on December 31, 2020 was, in fact, the 33rd record high for the year. This was the eighth time since 1928 that the S&P 500 closed on a new high on New Year’s Eve.
Yahoo’s data shows that the S&P 500 sat at 3,370 points prior to the pandemic, falling as low as 2,447 points in March 2020. By December 25 though, it had recovered to 3,662 points.
The situation was not much different for the Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq.
The Nasdaq Composite Index fell by about 2,400 points between February 12 and March 11, 2020. However, by December 14, 2020, it had recovered to 12,595 points, much higher than its pre-pandemic level of 9,700 points in February 2020.
The DJIA dropped around 8,000 points between February 12 and March 11, 2020. By December 14, 2020, it had recovered to 30,199 points. For perspective, it stood at 29,000 points in February before the pandemic.
The Dow finished 2020 at a record high, gaining 7.25% on the year. Nasdaq, on the other hand, had its best annual return since 2009, finishing with a 43.6% gain.
Top 3 Tech Companies Add a Collective $2.2 Trillion in Market Value in 2020
Twenty of the record highs that the S&P 500 posted during the year were recorded after the pandemic. To a large extent, the performance was driven by mega-cap stocks that thrived during the pandemic even as others suffered massive hits.
The result was a top-heavy market and at the end of the year, the 10 largest stocks on the index accounted for 27.4% of the total market value. Compared to 2019, this marked an increase of 4.7 percentage points.
Apple led the upsurge, having gained 82.3% during the year on a total return basis (dividends included). Amazon, on the other hand, rose a remarkable 72.6% while Microsoft had a 42.5% increase.
Together, the three tech giants accounted for 53% of the total returns posted by the S&P 500. Further illustrating the uneven performance, without the inclusion of the 30 largest stocks by market cap, the index actually had a decline of 0.03% in 2020.
The best-performing sector was information technology, which posted 43.89% growth. Notably, it includes Microsoft and Apple. For the consumer discretionary sector, which includes Amazon, there was a gain of 33.3%.
Apple saw its market cap jump by nearly $1 trillion in 2020. For Amazon, there was an increase of $700 billion and Microsoft gained an impressive $480 billion.
Other big tech gainers in 2020 included Alphabet, which raked in an additional $268 billion and Facebook, which added $193 billion.
Tesla, which became the biggest ever addition to the S&P 500, also enjoyed a wild rally. It rose from a market cap of $76 billion at the start of the year to close at $669 billion by the end of the year.
Nvidia closed at a market value of $323 billion, more than double its opening value. For the top seven most valuable companies in tech, there was a cumulative increase of $3.4 trillion in market cap.
Energy Sector Plummets 33.7% YoY
Energy was the hardest hit sector on the index, suffering a 33.7% blow. That was as a result of a huge drop in demand due to travel restrictions, as well as an immense decline in oil prices.
Financials and real estate were the only other sectors posting negative growth, with 1.7% and 2.2% dips respectively.
For the index’s energy sector, however, there was a glimmer of hope towards the end of the year. In tandem with announcements of effective vaccines, the stocks soared by 28% in November 2020 and in December 2020, by 4.4%.
Overall, the S&P 500 saw an 11% spike in November 2020 as all 11 sectors recorded growth. Similarly, it jumped by 3.7% in December.
Financial stocks were the top performers in December, with an increase of 6.3% for the sector as a whole. Utilities had the lowest gains, at 0.7%.