Stock Market Trends to Watch for 2021

From March of 2020 until now, the global securities markets have seen it all: rallies, slumps, sell-offs, bankruptcies, legal problems, record highs, record declines, and other headline-grabbing events. In some ways, it almost feels like the stock market lived through an entire decade within the span of just 10 months. Of course, most of that volatility was related to the COVID pandemic. 

Now, much of the economic strife that followed on the heels of the worldwide virus is finally waning. Companies are getting back to near-normal production levels, children are returning to schoolrooms, and some of the hardest hit corporations are seeing their share prices rise. What does the rest of 2021 hold for investors who choose to park the majority of their money in the securities markets? Here's a summary of what might happen.

Marijuana/Cannabis Stocks

The entire cannabis sector has seemed almost immune from the effects of COVID. Why? There are a lot of theories, one of which notes that legal changes and the fact that so many people were quarantined in their homes pushed consumption of recreational cannabis higher. Indeed, the first two weeks of February 2021 witnessed a significant rise in some of the top stocks within the marijuana sector, a half-dozen of which were among the biggest movers of the 2021 rally so far.

Every passing year seems to see at least one or more U.S. states and several nations pass new legislation that eases restrictions on buying, selling, and using recreational marijuana, more formally called cannabis. There are no elections in the U.S. in 2021 but there is widespread expectation, at least in the media, that federal laws will be passed to further decriminalize possession and use of cannabis.

All Things Pandemic-Related

Most of the major market trends of 2021 will likely be tied to the decline of the COVID virus and its harsh economic effects. Any company that produces vaccines, infection-testing equipment, or chemicals that are used in vaccines stands to do well. Indeed, if 2020 is called the "Year of COVID”, 2021 might end up being labeled, "The Year of the COVID vaccine”. One long-term winner from the pandemic is e-commerce, a segment that saw profits soar from the first days of the lock-downs.

Companies That Lagged in 2020

Businesses that rely on in-person sales, like restaurant chains, theaters, and sports venues, could see a resurgence as the virus subsides. Of course, this rosy scenario only applies to corporations that weren't bankrupted by the pandemic, as many in third-world nations were. But for the most part, it's logical to expect the major restaurant holding companies to bounce back from the depths of 2020.

Another sector, not a single company, that could do well this year is real estate. New home sales took a beating since last March because so many young couples were financially strapped, and they are the drivers of this section of the real estate market. If employment rates recover and people are not as afraid to invest in new homes, it's possible that real estate and associated industries could have a very good year.