The Stock Market Was Amazing in 2020 -- Let Us Count the Ways

It's finally over: 2020 is in the history books. For stock investors, it was an amazing year, with the Dow Jones Industrial Average (^DJI 0.65%) and S&P 500 (^GSPC 1.19%) closing at all-time record levels. The Nasdaq Composite (^IXIC 1.67%) fell just short of its own record, but it capped its best year in more than a decade. Here's a look at the final trading day of 2020:

Data source: Yahoo! Finance.

Investors got a full range of experiences in just 12 short months, going from euphoria to despair back to euphoria and more. Below is a list of ways in which the stock market was truly amazing.

Image source: Getty Images.

1. Strong returns

After performing extremely well throughout the 2010s, many came into 2020 thinking the market was long overdue for a decline. It certainly got one -- but by the end of the year, returns were reminiscent of the height of the bull market. The Dow's gain of about 8% was modest, but rises of 17% for the S&P 500 and a whopping 44% for the Nasdaq were sensational.

2. Huge swings

If you went to sleep on Jan. 1 and woke up on New Year's Eve, you might've thought the year was just another solid winner. But along the way, investors endured the most rapid bear market ever. The Dow started the year at 28,538, but dropped more than 10,000 points at its low before regaining all of that and adding another 2,000 points to boot. Similarly, the S&P traded between 2,192 and 3,756, and the Nasdaq came close to doubling from its low of 6,631 during March.

3. A big year for megacap stocks

It's not every day that you get massive growth from the biggest companies in the market, but that's what 2020 delivered. Tesla earned plenty of headlines for its gain of 750% for the year, but it was just one of four S&P 500 members with market capitalizations of $100 billion or more that doubled in 2020. NVIDIA, PayPal Holdings, and Advanced Micro Devices weighed in with gains of roughly 100% to 125%.

Moreover, even the biggest names in the market generally did well. Apple soared more than 80%, while Amazon saw a 78% gain. Netflix climbed more than 60% on the year.

4. Wide disparities among market sectors

2020 was a winning year overall, but plenty of industries completely missed out on the rally. Out of 11 S&P-recognized stock market sectors, four suffered outright declines in 2020.

Energy was the obvious loser, with plunging crude prices coming after massive disruptions in demand stemming from pandemic-prompted shutdowns. Also taking hits were the financial, real estate, and utilities sectors. Rock-bottom interest rates caused troubles for bank stocks and other financial institutions, while restrictions on travel and movement put pressure on real estate markets even as low rates made financing easier to get. Among utilities, unusual conditions made what are usually good safe-haven stocks less safe, and even attractive dividends weren't enough to draw much investor attention.

5. Another big year for bonds

For years, many have justified the stock market's gains by pointing to alternatives. Yet even though interest rates on bonds hit unprecedentedly low levels, total returns for the bond market were solid.

Looking across the bond market, one popular exchange-traded fund covering the gamut of Treasury, corporate, and other types of debt was up 5% for the year. Another bond ETF that concentrates on long-term Treasuries enjoyed a better than 15% gain. Once again, though, the dangers of bond funds, with rates as low as they are, remain significant -- especially as there's only so much lower rates can go from here.

Bring on 2021!

With 2020 in the record books, it's anyone's guess what 2021 will bring. Here's hoping that investors can keep finding ways to make money no matter how tough market conditions might become in the year ahead.