The double threat of an unpredictable pandemic and looming interest-rate increases is tempering investors’ optimism heading into 2022, a contrast to their vaccine- and stimulus-fueled enthusiasm of a year ago.
Investors had plenty to feel good about over the holidays. Supported by an economic rebound even stronger than most had expected, the S&P 500 climbed 27% in 2021, the third-largest gain of the past 20 years. U.S. crude surged 55% to roughly $75 a barrel. Interest rates on corporate bonds hovered around all-time lows, reflecting little perceived risk of default after a year in which few businesses went bankrupt.