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Jan 10, 2022

Market Highlights 4Q 2021

Christina Siegel Malbon

All major equity indices had a strong finish to 2021 despite increasingly negative news around the Omicron variant. The S&P500 finished the year up 28.7% followed by the Nasdaq Composite gaining 22.2% and the Dow Jones Industrial Average closing out the year with a return of 20.9%. All eleven sectors in the S&P 500 posted positive returns for the year, with Energy and Real Estate gaining the most with returns of 54.4% and 46.1%, respectively. Large-caps outperformed Mid-Caps, which beat small-cap names. Specifically, the large-cap Russell 1000 Index gained 26.4%, ahead of the Russell MidCap Index’s 22.6% return for the year, followed by the small-cap Russell 2000 Index’s 14.8% return. Growth stocks continued to outperform value stocks with the Russell 1000 Growth returning 27.6% compared with the Russell 1000 Value Index’s gain of 25.1% over the year. Bonds lagged stocks, with the Barclays Long-Term Treasury Index underperforming all equity benchmarks with a decline of -4.4%. The Barclays U.S. Aggregate did slightly better with a decline of -1.54%. Commodities gained, with the Bloomberg Commodity Index rising 27.1% while the dollar gained 6.4% and gold lost -4.5%. Despite Bitcoin’s bumpy ride, the cryptocurrency gained 59.8% during the year. Oil prices rose 55.0% reversing the declines seen in 2020. All major developed countries except for Hong Kong ended the year up in local currency terms. France’s market was the best, with a total return of 31.9% followed closely by the US at 28.7%. Emerging market countries had a strong year despite the dollar strength, with India and Russia posting the largest gains in local currency terms, 25.7% and 21.9%, respectively.

The S&P500 rose 0.58% beating both the Nasdaq Composite’s decline of 0.22% and the Dow Jones Industrial Average’s loss of 1.46%. Seven out of the eleven sectors posted positive returns during the period with Financials, Utilities, Telecommunication, and Health Care posting the largest increases with returns of 2.74%, 1.78%, 1.60%, and 1.43%, respectively. Large-cap stocks continued to outperform mid-cap stocks, which beat small-cap names. Specifically, the Russell 1000 Index rose 0.21% compared to the Russell Mid-Cap Index, which lost 0.93%, and the Russell 2000 Index, which declined 4.36% for the quarter. Growth stocks beat their value counterparts, as the Russell 1000 Growth Index gained 1.16% compared to the decline of 0.78% of the Russell 1000 Value Index over the same period. Bond returns were positive over the period with the long-dated US Treasuries returning 0.47% beating US corporates with the Barclays Aggregate returning 0.05%. The US Dollar Index gained 1.94% for the quarter while gold declined 1.06% and oil gained 2.12%. Bitcoin rebounded gaining 25.6% during the period.

Any developed country and emerging market country performance detailed above utilizes country specific benchmarks sourced from Bloomberg.

The views expressed in this commentary reflect those of Miller Value Partners analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.

©2022 Miller Value Partners, LLC