December added to stock market returns closing another strong year for stocks. Large company stocks led returns last month especially in health care, REIT, and utilities sectors. The Nasdaq closed the month down slightly but still had a strong year. Bonds were generally a little negative for the month and the year with municipals returning better.
Although inflation is already painful it does look like it is leveling in the U.S. 90% of the Fed stimulus is complete and if inflation dissipates, the Fed may accelerate tapering of the stimulus. The market has already priced this possibility in. The economy continues strong with consumer demand. There are many signs that stock prices will continue to grow although more slowly in 2022.
Variants of the COVID virus continue to threaten. Less virulent strains that are more contagious have an upside. Even though more people get sick, more people can become immune in a short time. That means worldwide herd immunity can happen sooner rather than later. It is not how we want it to happen. Somehow it must happen.
Happy New Year wishes. The bleak and cold hit us hard after the holidays every year. Our winter garden joy is feeding the birds. From the comfort of windows, we can watch their colorful activity in any weather. And they can congregate without concern of contagion.