US stocks 2021 year in review: “Big tech” stocks extend their run of dominance

With just a few trading days left in 2021 and volatility likely to be subdued, it’s a great time to review what worked and what didn’t over the past year.

Looking at US stocks, there’s a strong argument that just about everything “worked.” As the chart below shows, every single major sector rose this year, led by energy and real estate, and even the lagging consumer staples, utilities and communication services stocks rose by nearly 20% on (a capitalization-weighted) average:

Source: Stockcharts.com

From a sector rotation perspective, strong performance by energy, technology, financials, and discretionary stocks historically suggests that we’re in a mid- to late- bull market cycle; as we flip the calendars to the 2022, traders should be wary if we start to see traditionally defensive sectors like utilities, consumers stapes, and health care start to outperform as a potential signal that the bull market may be peaking and a bear market may be around the corner.

Drilling down to an individual stock level, these were the top 10 performers in the S&P 500 and their sectors this year:

1. Devon Energy (Energy) +199%
2. Marathon Oil (Energy) +151%
3. Fortinet (Technology) +146%
4. Signature Bank (Financials) +142%
5. Ford Motor (Discretionary) +137%
6. NVIDIA (Technology) +132%
7. Diamondback Energy (Energy) +132%
8. Moderna (Health Care) +131%
9. Bath & Body Works (Discretionary) +130%
10. Nucor (Materials) +118%

And, perhaps more importantly, these 10 stocks were the biggest contributors to the S&P 500’s impressive nearly 30% gain in 2021:

1. Microsoft (Technology) +55%
2. Apple (Technology) +36%
3. NVIDIA (Technology) +132%
4. Alphabet (Communication Services) +67%
5. Tesla (Discretionary) +27%
6. Meta Platforms / Facebook (Communication Services) +27%
7. Home Depot (Discretionary) +56%
8. UnitedHealth Group (Health Care) +45%
9. Pfizer (Health Care) +64%
10. Berkshire Hathaway (Financials) +29%

Once again, the megacap technology stocks drove most of the gains in the overall indices, leading to an even heavier weighting in these names heading into 2022. For more on the outlook for these tech behemoths, see my colleague Josh Warner’s report “Big Tech stocks: What will they face in 2022?” as part of our full 2022 Market Outlook guide.

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