Markets 2021: Stocks soar, IPOs explode, crypto goes wild

Wall Street delivered another strong year for investors in 2021, as a resurgence in consumer demand fueled by the reopening of the global economy pumped up corporate profits.

As of Dec. 22, the S&P 500 had risen 25%, its third-straight annual increase. Along the way, the benchmark index set 67 all-time highs.

The market weathered a number of challenges along the way. Skyrocketing inflation, worldwide supply chain disruptions and a global economy still vulnerable to the uncertainty created by the COVID-19 pandemic fueled market volatility, especially toward the end of the year.

Still, Wall Street got a boost from the Federal Reserve, which kept its key short-term interest rate at near zero all year. That helped keep borrowing costs for companies low and stock valuations high. However, investors expect the Fed to start pushing rates higher next year.

__

INFLATION GETS STICKY

Inflation awoke from a long slumber in 2021. The U.S. government’s consumer price index skyrocketed 6.8% in the 12 months that ended in November — the sharpest such jump since 1982. Wholesale prices rose even more. Many companies have raised prices to offset higher input costs and keep profit margins steady. Consumers are paying more for everything from Pampers diapers and Tide detergent to Cheerios to household appliances. It's unclear exactly when the supply bottlenecks will ease, so further price increases could be in store for 2022.

___

INVESTORS PILE INTO ‘MEME STOCKS’

Small investors piled into stocks in 2021, at times banding together on online forums like Reddit’s WallStreetBets to stoke a frenzy over certain targets like GameStop. The financially struggling video-game retailer surged more than 1,600% in January. The mania led to big losses for some hedge funds, multiple halts in...