5 Things To Watch in the Stock Market in 2021

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2020 has been quite the year, and this statement applies to almost every aspect of the past twelve months. Thankfully, we're turning the page of this year, and that also includes the stock market. 2021 certainly holds tremendous promise, as a COVID-19 vaccine begins to make its way around the globe. However, there are incredible pitfalls in the upcoming year. Here are five trends to keep an eye on as we look forward to 2021.

Potential Changes to the Dow Jones

As noted by the experts at Money Morning, the Dow Jones today, “…is a stock market index. The index is based on 30 large, publicly traded companies on any given trading day.” It consists of 30 of the most powerful companies in the world. However, this list is not static and is subject to change as the circumstances warrant. Depending on the economy we face in 2021, more companies may be added or subtracted to the Dow Jones, and that could indicate major changes to the economic trends of the moment.

New Presidential Administration

There is no question that the incoming Biden administration will have a major impact on the course of the stock market. However, the specific type of impact remains to be seen. On one hand, some investors worry that the Democratic President may hinder the stock market with policies that favor labor and the environment more than business. On the other hand, many investors crave a return to normalcy, predictability, and more open world markets – something the Biden administration has promised.

COVID-19 Vaccine and its Impacts

The distribution of the COVID-19 vaccine has begun, promising light at the end of the dark tunnel that the world has been under since the start of this pandemic. However, what still remains to be seen is how quickly the economy will bounce back, if it will bounce back, and what impact that will have on the stock market. Furthermore, how will the vaccine fare? Will it be as effective as we all hope? If there are challenges with its distribution or impact, how will that hurt the market? These are important questions that will be answered.

Pent-Up Consumer Demand

Billions throughout the world have altered their spending patterns as a result of COVID. In theory, we could be heading back towards more “normal” economic times. This begs the question: How will this impact devastated industries, like restaurants and travel? And how will this pent-up demand hit stocks? Will they become easy buying opportunities, or are many of these industries simply too far gone to be attractive offers anymore?

Climate Change

There is no longer a question about the reality of climate change. However, its strength – and the impact of climate change on the rest of the world – remain to be seen. How will the stock market react to continued uncertainty in the environment of the world? Furthermore, what happens if climate change occurs at quicker rates, and how will that shift investments?