Home > Market wrap for December 2021: Alphabet top Big Tech stock

Market wrap for December 2021: Alphabet top Big Tech stock

Here is the stock market wrap for December 2021, with Alphabet (GOOG) the top Big Tech performer for the year.

The S&P 500 recorded 70 new highs and is set for a 27% upside at the market's close. Meanwhile, in Europe, France’s CAC 40 outpaced the Stoxx 600 and the UK benchmark FTSE 100, set for a 30% gain this year.

In crypto, Bitcoin jumped to an all-time high of $69,000, despite a major crackdown in China, though it has since declined to hover below $50k. Meanwhile, traditional hedge asset gold bounced above $1,960 per ounce earlier in the year, but has struggled and is on track for its biggest yearly drop since 2015.

Meme stocks were another breakout story in the market this year, with retailers inspired by WallStreetBets pushing the GameStop (GME) to new all-time highs. AMC Entertainment, which had struggled in 2020, also rose to become one of the biggest gainers in 2021.

Among the Big Tech companies, Facebook rebranded to Meta Platforms, while Apple Inc. flirted with a $3 trillion valuation.  Tesla CEO Elon Musk also took center stage in 2021, both for his strong support of meme coin Dogecoin and the selling of millions of TESLA shares.

Major stock indexes monthly recap

The S&P 500 is up 4.6% over December, while Dow Jones Industrial Average has gained 5.6% and Nasdaq composite 1.3%. The blue-chip S&P 500 is set to end 2021 solidly in the green with gains above 28%, while the Nasdaq (+22% YTD) and Dow (+20% YTD) are also poised for double-digit gains.

In Europe, the Stoxx 600 is up 5% this month, with the pan-European index on track for a 22.5% gain over the past year.

France’s CAC 40 is up 6.7% in December and eyes an annual change of +30%, while the DAX is up 5.2% on the monthly log and looks set for a yearly upside of 16%. The FTSE 100 has added 4.8% this month and will close nearly 15% higher in 2021.

Key market events this past month

Inflation surprises

Inflation data across major economies showed growth at rates not seen in decades, with the US and UK data for November showing the fastest pace year-on-year growth in 39 years and 10 years respectively.

Consumer price index (CPI) data for the US showed a 6.8% jump YoY, the highest it’s been at since 1982. In the UK, inflation rose 5.1% to a 10-year high, with consumer prices spiking on supply chain bottlenecks and rising energy prices.

Earnings season helped stocks

A strong rally for the market in the last few weeks of 2021 was propped on an equally strong earnings season for some of the leading companies across the globe. Net sales buoyed by strong demand ahead of the holiday season also largely offset sentiment weighed by lower valuations and downbeat guidance.

Omicron variant stalls markets

In December, travel and healthcare stocks mainly tracked sentiment about the Omicron virus strain. While the variant did have a negative effect on the markets, it’s not as severe as earlier feared. Governments have largely restrained from imposing 2020-style restrictions, meaning a gradual return to normalcy will boost markets.

Federal Reserve and Bank of England strike a hawkish tone

The Fed announced it was dialing up its bond purchasing program and that it would seek three interest rates hikes in 2022 and 2023.  The Bank of England surprised by raising bank rates in mid-December, with the broader market cheering the two hawkish tilts with a significant bounce. A drawdown followed though, and going into the new year, investors will keenly watch how the Fed proceeds with its plans.

Top performers in S&P 500 and Big Tech stocks

In the S&P 500, top-performing stocks of 2021 included Moderna (MRNA) at +130%, NVIDIA (NVDA) at +132%, Fortinet (FTNT) at +146%, Marathon Oil (MRO) at +150%, and Devon Energy (DVN), which is up 198% this year.

Among the Big Tech stocks, Alphabet Inc. (GOOG) tops as the best performer with YTD gains of 68%, compared to the S&P 500's 52-week change of 28%. 

Microsoft (MSFT) is next with 51%, while Apple Inc. (AAPL) has seen gains of around 33% for third spot. Facebook (now Meta) comes next with 23% in year-to-date gains, while Amazon (AMZN) has about 5% in yearly gains.

In summary,

2021 is set to go down as another good year for the markets, with stocks posting double-digit gains for the year and other segments of the market like cryptocurrencies attracting more attention from institutional investors.

The S&P 500 is expected to surge in the second half of 2022,  while growth in the metaverse and NFTs sector could uplift crypto markets. Oil and gold are also projected to reach new highs, as are projections for bonds.

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