Market Review: December 31, 2021

Closing Recap

Friday, December 31, 2021





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Wishing all of you and your families a Healthy, Safe and Happy New Year! U.S. stocks finished lower on Friday, sliding into the close, but posting strong overall gains for the full year. The S&P 500 climbed 27% on the year, the Dow up about 19% YTD, the Nasdaq up 22% YTD, the Russell 2000 up 13.8% YTD and Dow transports up nearly 31% YTD. In addition to the end of 2021, today also marks the end of Q4 and December as the S&P 500 (SPX) has now risen 7 straight quarters, its longest quarterly win streak in 4 years, while also posts its best December since 2010 (rises over 4.5%). It was a very quiet day with light volume as many markets around the world were closed or had half days outside of the U.S. on this New Year’s Eve. Not much in way of stock news on the day, but here are a few highlights below.

·     The S&P 500 top five gainers/decliners in 2021: top five advancers: DVN 176%, MRO 146%, FTNT 143%, SBNY 136%, MRNA 136%; while YTD top S&P decliners are PENN -40%, GPN -37%, LVS -36%, ATVI -27%, MKTX -27%

·     Large cap tech outperformance a significant reason for overall S&P outperformance with NVDA +126% YTD, GOOGL up 66% YTD, AMD +58%, MSFT 52%, TSLA 51%, AAPL 34%, FB 26%, NFLX 13% (AMZN notable laggard up 3% YTD). FAANG companies together have roughly gained over $1.50 trillion in market value in 2021, as per Refinitiv

·     U.S. listed Chinese stocks were among the worst performers this year amid widespread Beijing’s crackdown on the Internet and financial sector as well as regulatory probes into Didi over data handling practices; BABA down -48% YTD, PDD 66%, BIDU 31%, WB 23%, TME 64%

·     Electric vehicles posting strong returns in 2021 with big IPOs; TSLA booking 52% gains for the year, along with gains in LCID up 60%, RIVN up about 34% above IPO price, FSR up 11% this year, but it wasn’t all roses with shares of NKLA, RIDE and WKHS tumbling on the year

·     Strong year overseas as Europe’s Stoxx 600 ends 2021 up 22.5%; Britain’s FTSE 100 ends 2021 up 14% (biggest gains in 5-years); France’s CAC 40 ends 2021 up 29%, Spain’s IBEX ends 2021 up 8%; Euro Stoxx index up 21%

·     You need to go back to the end of the 1990s to find a three-year stretch as good as the current one for the global stock market. For 2021, the MSCI All-Country World Index was up 16.9% through late Thursday, after surging 14.3% in 2020 and 24.1% in 2019.

·     The collective balance sheet assets of the Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England shot up from about 36% of their countries’ total gross domestic product at the end of 2019 to 59.5% in November, Bloomberg data show – WaPo



·     Oil prices dropped for the first time in 8-days, with WTI crude down -$1.78 or 2.3% to settle at $75.21 per barrel, but between OPEC impact and declining inventories, WTI crude posted a 55% advance for the year. On the week, WTI rise about 2% and jumped 13.7% for December. Natural gas prices rose 46% in 2021, its best year since 2016. OPEC+ set to hold a meeting next week, but quotas are not expected to be adjusted.

·     Gold prices rise $14.50 or 0.8% to settle at $1,828.60 an ounce (a 6-week high), rising 2.9% for the month and 4% for Q4, but still finished the year lower by 3.6%, its steepest decline in 6-years as the dollar jumped 7% for 2021. Silver was down about 11.8% in 2021, its worst year since 2014, spot palladium down 22% in 2021, set for first annual decline in six years.


Currencies & Treasuries

·     The dollar index (DXY) slipped on Friday but closed out 2021 with a gain of nearly 7% with rising expectations for rate hikes from the Fed amid surging inflation driven by stimulus initiatives. The gains were the most since 2015 amid the recent hawkish turn by the Fed, which is now expected to begin raising interest rates as early as March. The Japanese yen is down roughly 10% on the year vs. the buck, while the euro slipped around 7% as the ECB remains more accommodative. The biggest decliner vs. the buck was the Turkish lira (around 45%) amid soaring inflation and the Turkish government’s unorthodox monetary policy.

·     Treasuries went out quietly the final week of 2021 with the 10-yr at 1.51%, but it closed 60bps higher on the year (it’s largest yearly gain since 2013)– with several key issues for rates heading into 2022. The Fed’s $8.75T balance sheet, inflation, and its tightening impact on equities. For the month, the quarter, and the year, the 2-year Treasury note is up 20.6 bps, up 44.1 bps over the past three months, and 61.1 bps in 2021; the 10-year Treasury is up 5.6 bps in December, down 3.2 bps on the quarter and up 58.3 bps in the year to date.






WTI Crude















10-Year Note





Stock movers:

·     BKR – Baker Hughes (BKR) weekly rig count unchanged at 586 as oil rigs also unchanged at 480. For the year, the total rig count is up 235 rigs from last year’s count of 351: oil rigs up 213, and gas rigs up 23

·     CCL, NCLH, RCL slide further following yesterday after the CDC advised Americans to avoid cruising, even if vaccinated

·     DIDI, BABA, JD slip pare yesterday gains after U.S. listed Chinese stocks surged on Thursday

·     NVAX submits final data packages to U.S. FDA as prerequisite to emergency use authorization application request for COVID-19 vaccine; EUA application request to be submitted following 1 month required by FDA EUA guidance

·     ORCL shares fall an 11th straight day of declines – follows recent analyst downgrades following the Co’s $30B acquisition of $CERN (15% decline during that stretch)

·     PFE gains as Britain’s regulator approves PFE’s Covid-19 antiviral pill, just weeks after clearing rival Merck’s oral treatment

·     PTON shares slip after being downgraded at JMP Securities as website visits and page views declined Y/Y in December (month-to-date) per SimilarWeb and lower ests below consensus

·     XEL shares dropped as Colorado wildfires caused by strong winds destroy power lines and transformers and burn hundreds of homes near Boulder.

·     XERS jumps as the FDA approved its Recorlev, for treating adult patients with a type of Cushing’s syndrome for whom surgery is not an option or has not been curative

·     XLNX slips after AMD says it will close its planned acquisition of Xilinx in Q1 2022, instead of previously announced late 2021 – delay due to pending approvals but says talks with regulators progress productively

·     XOM now see Q4 EPS above the street in a filing after the bell yesterday that showed they see Q4 gains from oil prices at up to $800M, gas prices up to $1.1B

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.