As 2020 comes to a close, the stock market is off to a strong start to kick off the month of December. U.S. stocks are currently trading at all-time highs and the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite indexes have gained significantly since the election back in November. In addition, the Russell 2000 index, which tracks small-cap companies, is up 6.4%.
Investors are currently optimistic as a Covid-19 vaccine has been approved and is now being administered, leading to hopes that the pandemic can finally start to come to an end. Furthermore, the government is likely to continue to provide stimulus to keep the economy afloat and to help workers and businesses that are still struggling.
The strong start to December is also indicative of a very strong year for stocks overall. Since the pandemic began back in March, the Dow is up almost 8%, the S&P 500 has gained 12.9%, and the Nasdaq has surged 25.4%. There are also signs of improvement in the job market, as initial job claims have decreased.
So, what does this all mean for the rest of the year?
For one, economic growth is expected to rebound next year, and the vaccine should provide an added boost to the recovery. On top of that, the Federal Reserve is continuing to offer plenty of support to markets and investors, which should help to sustain the current rally.
Furthermore, many companies are now sitting on a lot of cash, due to delayed travel and business spending. Once the travel bans and other restrictions are fully lifted, corporations could start to start to make investments that could propel stocks even higher.
All in all, the stock market is off to a great start as we move into 2021. With the vaccine almost fully rolled out and more stimulus likely on the way, the markets should see some more upside potential for the rest of the year. So, investors should remain optimistic as there are plenty of tailwinds currently encouraging growth.
