There were several events in 2021 that had significant impacts on the financial markets, including new Covid variants, Federal Reserve Policy, and a changing economic climate. Here’s a recap of some important events that happened last year and an explanation of why they’re essential moving forward.
And if you want to see what Fragasso Financial Advisors wrote about the first and second half of 2021, be sure to review A Look Back on 2021 Part 1 and Part 2 for all the details.
January
One of the significant events that launched the events of 2021 was investor euphoria and interest in meme stock investing. Gamestop (GME), the retail video game and consumer electronics retailer, saw its stock prices surge in January.
For years following the Great Recession of 2009, Gamestop struggled as many Americans opted to buy online and purchase video games digitally. But retail investors made a massive bet against institutional investors shorting the stock after multiple failed attempts to adapt to a changing retail landscape.
March
March saw the rise of “bond vigilantes,” unhappy with the Federal Reserve’s quantitative easing policies. These investors believed that bonds were overpriced and that bond prices would decrease.
This led to a dramatic fall in the bond markets, and it signaled how serious investors were about Federal Reserve Policy. While the bond markets were falling, domestic stocks increased in value, with the S&P 500 rallying 4.38%.1
1Bloomberg
May
Discussions about inflation became mainstream, as reports showed that retail prices were increasing rapidly during the second quarter of 2021.
Although investors felt it was temporary, and the Federal Reserve began taking actions to tighten monetary policy, they also began to fear that the Federal Reserve would overreact to prevent interest rates from spiking.
July
When Virgin Galactic completed the first commercial flight to space, the space race heated up. With the success of Virgin Galactic, other private companies began making plans for commercial flights into outer space.
This was also when Amazon (AMZN) reached its trillion-dollar valuation. With Amazon’s market capitalization at over $1 trillion, Jeff Bezos became the wealthiest person in the world, surpassing Bill Gates, only to later be surpassed by Tesla Founder Elon Musk.
September
In September, home prices were a primary focus for investors, as housing prices saw an end-of-year surge while new home sales also increased.
The rise in home prices showed that investors were beginning to believe in a new housing market bubble. As more people were working from home, there was a need for more office space, leading to high demand in home prices, especially those with “office rooms.”2
In Conclusion
There’s no doubt that 2021 was a unique year with many challenges, surprises, and new events. Fragasso Financial Advisors is committed to providing their clients with proactive investment and financial planning advice, in accordance with such economic and political climate events like those referenced in this article. If you would like to learn more about Fragasso Financial Advisors philosophies and methodologies, visit https://www.fragassoadvisors.com.
1 Bloomberg
2 https://www.barrons.com/articles/housing-market-remote-workers-outlook-51631239674?mod=past_editions
Investment advice offered by advisor representatives registered through Fragasso Financial Advisors, a registered investment advisor.
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