The stock market has continued to rally in 2021, with growth stocks leading the charge. After a rough 2020, several indexes are already in positive territory this year, along with many individual stocks.
The Dow Jones Industrial Average is up almost 11 percent for the year, while the S&P 500 has gained 6.5 percent. The tech-heavy Nasdaq Composite has been the big winner, jumping over 13 percent since the start of the year.
Growth stocks have been the biggest beneficiaries of the rally, as investors shift focus to more aggressive areas of the market. Companies such as Apple, Amazon, Microsoft, and Tesla have all seen their stock prices surge in 2021.
While it’s generally wise to be wary after a long period of gains, the market’s current upward trend appears to be driven by a surge in corporate earnings. With the economy likely to continue to rebound this year and the Federal Reserve continuing to keep interest rates low, many analysts remain positive on the outlook for stocks going forward.
The cyclical sectors, which have been lagging growth stocks thus far, could also rally in the months ahead. Many of these stocks are trading at discounts to their historical averages, providing investors with potential upside in the near term.
As the coronavirus pandemic slowly recedes, shares of industries from travel and leisure to energy are likely to benefit. The vaccine rollout is expected to further aid in the recovery of these sectors and could lead to further gains in the stock market.
Overall, the market continues to remain in a bullish trend, with several indexes already posting strong gains for the year. Growth stocks remain the strongest performers, but investors should also keep an eye on the cyclical sectors as they offer potential upside in the near term. With corporate earnings likely to remain strong, the current winning streak is likely to continue in 2021.