After a shaky start to the quarter, the S&P 500 index of US large-cap stocks resumed its upward trajectory and added another 11% to end the year at an above-average increase of 28.7%. On the other hand, bonds in aggregate delivered a flat year, with the BarCap US Aggregate Bond Index returning 0.0% as yields faced upward pressure. Heading into 2022, we see investors beginning to place more significance on economic and company-specific fundamentals (as opposed to growth sentiment and price momentum) as shifts in core drivers of value take hold. Shifting expectations around Interest Rates, Inflation, and Growth can drive large changes in how markets view and value stocks, bonds, and everything in between. In this quarter’s commentary, we discuss all three drivers, particularly as they relate to the stock market and our approach to equities in client portfolios.
