U.S. stocks opened near record highs on Monday, as investors built on momentum from last week into at least the first session of the new year. The S&P 500, Dow and Nasdaq each advanced.
U.S. equities posted another year of solid gains in 2021, rising by 27% and delivering a rare third consecutive double-digit annual percentage increase. Within the S&P 500, the energy and real estate sectors outperformed, gaining more than 42% each during the year for these sectors' best annual gains on record.
Still, the blue-chip index's robust overall rise was powered on a stock-by-stock basis by just a handful of mega-cap names. According to Goldman Sachs analyst David Kostin, the five largest components of the S&P 500 (or Facebook, Apple, Amazon, Microsoft, Google) together returned 37% last year – and now constitute about 23% of the entire index.
"In 2022, variables associated with earnings and valuation will determine the performance of the S&P 500 index and its underlying constituents," Kostin wrote in a note Monday. He expects the index to rise another about 7% to end 2022 at 5,100, with his outlook one among several Wall Street predictions calling for a gain to more than 5,000 for the S&P 500 this year.