We have all endured the COVID-19 pandemic for over a year now, and the one-year return data is beginning to reflect the significant come back we have witnessed in the stock market. It appears fiscal policy has effectively bridged the income gap between massive job loss in the services sectors and the broad vaccine distribution that has hastened the reopening of the economy.
U.S. stocks turned in a second consecutive quarter of dramatic gains, continuing a historic stock market recovery that few predicted in the depths of the March downturn. The S&P and Nasdaq Composite scored a string of records in the third quarter which has confounded many investors with its sheer velocity and strength.
When this quarter began, the stock market was just beginning to pick itself up from one of the worst
and quickest declines in history. The 34% decline from February 19 to March 23 this year was an
indication of just how weak the economy would be in the second quarter.
In response to the COVID-19 pandemic, Congress passed the CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT (CARES Act) on March 27, 2020. The bill provides financial aid for individuals and companies. The CARES Act also has provisions allowing access to retirement savings and suspension of required minimum distributions.
The year 2019 began with a strong rally in the stock market and ended in the same impressive manner. Gains were realized across the board as all major asset classes fully participated in this rally making it one of the best years in a great decade for the financial markets. Annual stock returns around 30% erased the memory of a difficult fourth quarter 2018.