Despite the persistent headwinds of Covid-19, U.S. stocks finished their final trading session of the year lower, capping off a record-setting 2021. The S&P 500 ended 2021 with a nearly 27% gain, but dipped in the final trading day of the year.
In other news, there was a sentiment shift in the stock market in 2023. All the chatter back in December was that 2023 was to be the “year of the bond.” However, it is now being overrun by an avalanche of demand for equities that has unleashed a furious rally across the globe. This has made investors more optimistic about stocks relative to bonds than at any point since SentimenTrader models began comparing them 24 years ago.
There have also been some recent news about stock market crashes. For example, Moderna’s stock fell as much as 13% on Monday to a 10-month low of less than $140, pushing shares down more than 30% over the past month amid a sell-off largely centered on technology and healthcare firms that skyrocketed in value during the pandemic. Jeremy Grantham, the co-founder of GMO, also warned investors of the potential for a big stock market crash later this year. In his bear-case scenario, he warned of a potential 50% decline in the stock market this year as he believes valuations are still too high even after last year’s 20% decline.
