The month of December ended a volatile six-week period with the S&P 500 index and NASDAQ Composite experiencing several weekly losses and gains exceeding 2 percent and 3 percent, respectively. Concerns about Federal Reserve policy, inflation, the Omicron variant, and the future of the Biden administration’s Build Back Better, among other things, were responsible.
Nevertheless, the S&P 500 index gained 4.3 percent in December and was up 26.8 percent for the year as inflation spiked to multi-decade highs led by oil prices, which rose roughly 55 percent. Meanwhile, interest rates on the 10-year Treasury Note rose from 0.93 percent at the end of 2020 to 1.52 percent at year-end 2021.
The headline numbers by themselves were deceiving as there was quite a bit going on underneath the surface. The median S&P 500 stock has corrected 15 percent from its 52-week high, and as many as 208 stocks trading on the New York Stock Exchange and 738 stocks trading on the NASDAQ hit new 52-week lows on the week-ending December 3, 2021.
In addition, the Initial Public Offering (IPO) exchange traded fund was down more than 10 percent in 2021 despite the hype of the new issue market. It seems that a number of companies that had immature business models went public because money was available and interest was high.