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2021 In Review

January 14, 2022

Wow, another year is in the books. As we reflect on 2021 it’s difficult not to think of the past year as 2020’s sidekick. We clearly remember the struggles and challenges our world collectively faced in 2020 but, although 2021 had several challenges of its own, the world and markets proved resilient in 2021.

Overall, domestic equites had a very robust year. The always-watched S&P 500 Index outperformed many economists and market participants expectations in 2021 finishing the year up 28.68%. Trailing not too far behind were the NASDAQ Composite Index and the Dow Jones Industrial Average Index which returned 22.21% and 20.95% respectively. On a relative basis, Growth stocks outperformed Value and, although Small and Mid-caps performed stronger in the first quarter of 2021, large caps outpaced small and mid-cap indexes over the course of the full year. Lastly, on the international side, the MSCI Emerging Markets index and the MSCI ACWI ex US Index returned -2.47% and 8.53% in 2021.

The resilience of domestic equities was especially encouraging for market participants considering the whole of the year was dominated by ominous headlines.

The concern of rising inflation, though, was a common theme across the latter half of 2020 and continues to be a key point of concern for many investors and policy makers. 2021 posted the largest yearly increase in the Consumer Price Index number in nearly 40 years.1 The congested ports and rising input costs that first reared their heads in 2020 were expected to wean in early 2021 but this hope was suddenly halted in late March as one of the world’s largest container ships lodged itself and blocked access though the Suez Cannel. Although the blockage lasted less than a week’s time, the backlog of cargo ships quickly grew to 450 ships with an estimated impact of 12% to global trade.2 Domestic markets took the news in stride however and continued to rally higher through the month of April.

The emergence of two Covid-19 variants triggered major concern across the globe in 2021.

In May, the proliferation of the Delta variant quickly became the dominant strain in the U.S.. Delta’s ability to spread though vaccinated individuals sparked worry through medical professionals and markets.3 Q2 and Q3 set up to be a choppy period for equities as Delta continued to spread and vaccine efficacy was in question. Fortunately, towards the end of Q3, the vaccine still proved effective in reducing severe illness from Delta infections.

In Q4 markets broke out making new all-time highs with renewed hopes that the 2020 pandemic was finally in the rearview. Unfortunately, in December a new variant emerged with origins from South Africa. Initially there was major concern with this new Omicron variant as it appeared to have the greatest transmissibility of all Covid-19 variants. As cases rose and spread continued though the U.S. and other parts of the world, early studies suggested that individuals infected with the new variant were up to 70% less likely to be hospitalized.4 The positive reports were welcoming news for individuals and their families as the end of the year holidays approached.  

To wrap up, there is no doubt the past few years have been a rollercoaster of emotions for people, their families, and their financial situations. Markets endured a dramatic drawdown and recession in 2020 only to realize an equally impressive rebound in 2020 and 2021. Creation of vaccines and swift monetary and fiscal policy changes in a time of crisis have helped us emerge with hopes that 2022 is yet another productive year for investors and the beginning of the end for the Covid-19 Pandemic.

1https://www.theguardian.com/business/2021/dec/10/us-inflation-rate-rise-2021-highest-increase-since-1982

2https://www.bbc.com/news/business-56559073

3https://www.cdc.gov/coronavirus/2019-ncov/variants/delta-variant.html

4https://www.bbc.com/news/health-59769969

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange.

The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.

The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.

The MSCI Emerging Markets Index consists of 25 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index.

The MSCI ACWI Ex-US Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets excluding the United States. The MSCI ACWI consists of 22 developed and 25 emerging market country indexes. 

There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical measurements are one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity.

The Reports’ commentary, analysis, opinions, advice, and recommendations represent those of Stadion Money Management and are subject to change at any time without notice. The opinions referenced are as of the date of publication and are subject to change to due changes in the market or economic conditions and may not necessarily come to pass Stadion reserves the right to modify its current investment strategies based on changing market dynamics or client needs. This document may contain certain information that constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “expect,” “will,” “hope,” “forecast,” “intend,” “target,” “believe,” and/or comparable terminology. No assurance, representation, or warranty is made by any person that any of Stadion’s assumptions, expectations, objectives, and/or goals will be achieved. There is no guarantee of the future performance of any Stadion portfolio. This material is for information use only and should not be considered financial advice. The data presented has been gathered from sources believed to be reliable; however, their accuracy, completeness, or reliability cannot be guaranteed. We make no warranties and bear no liability for your use of this information.

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