Market Commentary — January 4, 2021
Happy New Year and welcome 2021! The stock market posted modest gains the last week of the year, capping off a strong year for the market for tech and growth stocks.
Looking back to the depths of pandemic despair in February and March, it is hard to believe that the market sits near record highs. Why was the stock market ultimately immune to the pandemic? Wall Street’s resurgence was fueled by the largest federal government stimulus package ever, unprecedented support from the Federal reserve, and optimism that ultimately all the economic pain and personal hardship will come to an end in the coming year.
Armed with effective vaccines, investors are focused on the future and stocks are, as LPL’s Ryan Detrick points out, “a forward-looking mechanism.” What is past, is past and the future economic picture looks bright.
Speaking of bright, over the holiday weekend, Bitcoin ignited, surging to a new record level, pushing above $34,000 for the first time. Investors are betting on continued institutional interest and “alternative currencies” such as Gold and Bitcoin have been a main beneficiary of the pandemic as inflation looms on the horizon.
Also fanning the flames of crypto speculation, VanEck refiled its SEC application for a bitcoin ETF. The ETF sponsor may be betting that a change in leadership at the SEC, with Jay Clayton stepping down as chairman, combined with Bitcoin’s growing institutional acceptance has increased the odds for regulatory approval of a Bitcoin ETF.
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