For Main Street and much of the country, 2020 may not end soon enough. But for Wall Street, the year ended on a much happier note, as investors hit record highs while betting that government controls and vaccinations will foster an economic recovery in 2021.
The market outlook on silver coatings follows a year that includes both a bullish market and a bearish market. “We’ve had a lot of moves here and the economy broke down very quickly,” Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, told CBS MoneyWatch.
“We fell a third from January 19 to March 23,” Silverblatt noted of the S&P 500’s pandemic-inspired free fall, the fastest to date.
But it was then. Investors in the S&P 500 stock index are making total returns close to 18% during the year, and most of that gain comes from just a trio of tech giants: Apple, Amazon and Microsoft. “Fifty-eight percent comes from these three companies and the top 24 take them,” Silverblatt said Wednesday.
The technology-laden Nasdaq compound rose 43.6% in 2020; the S&P 500 ended the year with a record high, 16.3% more; and the blue chip Dow Jones industrial average rose 7.2% to 2,068 points, ending the year at 30,606.
“We’re in a better place to get out of the year than in September because the concentration is broader,” Art Hogan, National Securities ’chief market strategist, said about a recent shift from work-from-home actions to the economically sensitive. “There’s an accumulated demand for things we haven’t been able to do.”
Biggest winners: Etsy and Tesla
These work-from-home values include Etsy, which rose about 330% year-over-year, a gain that only surpassed the S&P 500 by electric vehicle maker Tesla, just over 730%, according to calculations. of Silverblatt. Tesla shares benefited even more in December when the licensed car company joined the 500-share index that serves widely as a benchmark for the U.S. stock market.
Worst performers include Carnival and Norwegian Cruise Line, both down nearly 60% during the year, reflecting a coronavirus-hammered cruise and travel industry.
Nine months after the start of the pandemic, employers still are reduce jobs as coronavirus infections continue to spread, keeping many people at home and causing state and local governments to re-impose restrictions on social distancing from businesses.
“Half of the people who lost their jobs during the recession are still out of work, so the market predicts a recovery in economic activity next year,” Hogan said in hopes of a break from economic consequences of COVID-19 in the labor market. For example, weekly claims for unemployment benefits averaged 1.45 million in 2020 compared to about 220,000 in 2019.
Silverblatt agrees that investors are betting on easing a new round of government stimulus checks and vaccinations against COVID-19, but wonders if they are moving forward, in terms of how quickly any return to normalcy could occur. As he himself says, “This market is good; there is a lot of optimism.”
It cites a trend of individual investors as opposed to professional money managers entering the market from November. “People want to buy. We’re building to make the second half great.” But if the rebound doesn’t materialize as expected, Silverblatt predicts a moment to calculate stocks in the coming quarters.
The easy part of 2021 is predicting the direction of economic growth and revenue, the hardest part is predicting the right price-to-earnings ratio for equities, according to Peter Boockvar, investment director at Bleakley Advisory Group. A price-to-earnings ratio, or P / E ratio, is used to determine whether a company’s stock price is high or low relative to that company’s profit growth. “In case it is [the stock price] be 22 times [earnings]? 18 times? 15 times? 25 times? Boockvar asked. There is a wide dispersion in the possible results of S&P 500 based on this. ”
Global stock markets closed the year near record highs and the dollar remained at two-year lows.
Stunning dollar
The weakness of the “greenback” has come out under the radar with everything else, but I think it has the potential to be more relevant in 2021, as this is the starting point that reflects the market’s thoughts on states ’deficits and deficits. Wider and wider united “. Boockvar wrote in a year-end client note. “A more significant weakness would have implications for inflation and long-term interest rates.”
Interest rates are expected to rise as the economy bounces further with a vaccine.
Stocks of commodities – specifically oil, gas, agriculture and copper – continue to be favored by Boockvar, who also likes “precious metals, stocks, stocks that technology and Amazon have not eliminated, some travel and leisure names , emerging Asian stocks “markets, and the UK and Turkey, too”.