Key Takeaways:
- Markets started 2021 with a solidly positive run, until becoming unsettled over the last few trading days of the month.
- Volatility perked up as speculative trading and a notable short squeeze in GameStop, led by retail investors, shook markets and caught the attention of even non-financial media outlets. Despite the price swings, the S&P 500 finished the month within 4% of its recent all-time high.
- From an equity index perspective, Small Caps and Emerging Markets led the charge during the month, solidifying a strong three-month period of performance. Large Cap equities in both U.S. and Developed Non-U.S. markets fell modestly.
- Returns from fixed income asset classes were largely muted. Municipal bond indices squeezed out a positive return while treasuries ended slightly negative. The yield on the 10-year Treasury Note inched higher in January.
- The U.S. GDP grew at a 4% annualized rate in Q4, led by business investment and a strong housing sector. Discussions are ongoing for another round of fiscal stimulus. Meanwhile, vaccinations have been ramping up and the number of COVID cases declining, both positive developments for continued economic recovery.
You cannot invest directly in an index; therefore, performance returns do not reflect any management fees. Returns of the indices include the reinvestment of all dividends and income, as reported by the commercial databases involved.
Source — Bloomberg, Morningstar, treasury.gov. S&P Dow Jones Indices.
Please see the PDF version of this article for important disclosures.
