In 2020, the outbreak of COVID-19 brought about epochal changes in our lives. A bungee-cord rebound on hopes for economic recovery resulted in the shortest bear market on record. It was due to the pandemic and related government lockdowns sowing panic about the damage to the economy in the United States and globally. The benchmark index’s biggest one-day percentage drop since the ” Black Monday ” crash of 1987 took place in 2020. On 12 March, a 9.5% drop in the S&P 500.SPX>, put it down 26.7% from the February high and confirmed a bear market.
The S&P closed 2020 on Thursday at a record high with annual gains of 16.3% and 7.2%, respectively. The largest for the tech-heavy index since 2009 was the Nasdaq’s 43.6% year-on-year gain.
As stocks continued to recover and vaccine developments grew more promising, investors began to rotate towards corporations that historically vanquished as an economy moves out of recession. Retail investors have accounted for 25% of the stock market activity this year, up from 10% of the market in 2019.
The rise of intelligent, easy-to-use stock tracker apps like Delta has unleashed a flood of retail capitalist cash into stocks and helped fuel a watershed year for brand-new stock offerings.
Stock market trends 2022
The emerging generation of millennial investors
Currently, 6.5% of Millennials’ assets are inequities in the US. In subsequent years, the Boomers’ allocation to equities grew to over 25% implying further stock-market inflows may be in store.
Turbulence in global financial markets
Stock markets have declined over 30%. Credit spreads on non-investment grade debt have widened as investors reduce risks. This heightened turmoil in global financial markets is occurring despite the substantial and comprehensive reforms agreed upon by G20 financial authorities in the post-crisis era.
Expansion of the digital economy
While we may dine out more and venture to the movies, the world may never be how it was in 2019. The forces of digital transformation already dominated consumer and corporate spheres before COVID-19. The pandemic has only whisked this multi year trend toward digitization.
With the pandemic pushing office employees to work from home, the past year saw a 30% increase in corporate spending on tech hardware. People anticipate higher spending on digital services. Because the economy recovers and companies adjust to a “new normal.”
Learn about the economy and stocks
The big learning for investors, especially the newbies who jumped into stock investing in the latter half of 2020 is that there is no direct, immediate, and substantial relationship between the economy and the stock market. Two factors that have a role to play in determining the long-term movement of stocks are government policies and global liquidity. You can invest and track your profits through Delta for better stock understanding and invest accordingly.
Corporate sector indebtedness and market vulnerabilities
In many countries, businesses have become highly indebted. They are now vulnerable to deteriorating economic and market conditions. Amid an extended period of accommodative monetary policy, the cheap cost of borrowing has contributed to unprecedented corporate debt issuance. Consequently, the corporate debt stands at extremely high levels in many G20 countries. The growth of leveraged loans outstanding in the US and Europe has offset a slowdown in bank lending to provide indebted corporates with financing.