Seven months after markets had bottomed out, almost half the sectors had fully bounced back-although banking remained 19 percent below the pre-COVID-19 high, indicating concerns about the health of the wider economy.
Through the middle of the year, this dispersion grew, with the high-performing sectors gaining strongly and widening their lead on the lagging industries. But the recovery was far from even, and many industries-notably aerospace, air and travel, banking, insurance, and oil and gas-remained down significantly from their prepandemic peaks. The tide started to turn after mid-March as governments began responding with record stimulus packages, and by early June some sectors, such as pharmaceuticals and biotechnology, fully regained their market losses. Recall that early in the pandemic, all news was bad, uncertainty was extraordinary, and the downside seemed unlimited. We have placed one special set of companies, which we have dubbed the “Mega 25” (more on these later), in a “sector” of their own because their exceptional market performance would skew their industry results.Īct 1, spanning roughly the first month of the crisis, saw historically large and rapid declines across all sectors. To illustrate this, we have grouped 5,000 of the world’s biggest companies into their respective sectors and examined these sectors’ average shareholder returns over the course of the year. And this view puts the new realities we face into stark relief.įor equity investors, the drama of the past year has played out in four distinct acts, reflecting marked shifts in expectations about the pandemic’s duration and its impact on consumers and businesses (Exhibit 1). The fundamental trends have accelerated, propelling some companies forward at record speed while for others headwinds have turned into hurricanes.īy pooling investors’ beliefs about the future, capital markets are powerful indicators of what could lie ahead. In the year since, the world has changed, transforming our lives, our economies, and the fortunes of our businesses-an unfolding journey that is reflected in the ups and downs of share prices.
February 19, 2020, marked the stock market peak before the outbreak of the COVID-19 pandemic triggered a freefall in share prices.
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