US actions in 2020: a year for history books

NEW YORK (Reuters) – 2020 was a wild year for Wall Street, reserved for the end of the longest bullish market in history, with equity abuse due to COVID-19 outages and a rebound in ropes Narrow on economic hopes recovery resulted in the shortest bear market recorded.

After closing the record high on February 19, stocks fell by a month-long fall as the coronavirus pandemic and related government blockades sowed panic over damage to the U.S. economy and all the world.

A 9.5% drop in the S&P 500 .SPX> on March 12, the largest percentage drop in the benchmark index since the fall of “Black Monday” in 1987, down 26.7% from at the peak of February and confirmed a bearish market, broadly. seen as a decline of more than 20% from a maximum.

But the slide only lasted until March 23, when the S&P went down. It peaked in February on August 18, marking the start of a new bullish market. The 23-day trading of a bear market was the scarcest in history.

The S&P closed a record high on Thursday, 2020, as did the Dow Jones Industrial Average, with annual gains of 16.3% and 7.2%, respectively. The year-on-year increase of 43.6% on the Nasdaq was the largest for the technology index since 2009.

GRAPH: S&P 500 in 2020 –

Along with $ 2 trillion in US government fiscal stimulus to strengthen the economy, the main reason for the rise in stocks in March was the monetary stimulus measures provided by the Federal Reserve, which announced a program of economic support on March 23.

Fed moves kept Treasury yields low, making stocks more attractive to investors.

GRAPH: S&P dividend yield against cash at ten years –

As stocks continued to recover and vaccine developments became more promising, investors began to rotate toward companies that historically outperform as an economy emerges from the recession, i.e., small chapters, and towards cyclical sectors such as energy, materials, industry and finance, in the latter. part of the year.

With a large portion of cyclical names including “value” stocks, the group began to close the gap in what had long been a period of low performance over “growth” names. The style of value never completely restored dominance, but the momentum behind the technological actions that led the rally was enough to stop growth with the best performance this year.

GRAPH: one-year difference between growth and value stocks –

But even with the highest increase at the end of the year, the energy sector ended up being the worst by a large margin in 2020, while technology and discretionary consumers advanced the path.

GRAPH: S&P 500 sector performance in 2020 –

All in all, the uncertainty and fear associated with the pandemic caused the most volatile year of the S&P 500 in more than a decade, with an index that rose or fell 2% or more in more than 40 sessions.

GRAPHIC: Wall Street Whip –

In terms of individual stock performance, Tesla jumped the line in first place when it was added to the S&P 500 index on December 21st. It gained 743% a year.

The impact of the coronavirus was evident, with actions that benefited from the “stay at home” environment, such as the Etsy online marketplace, which increased by about 300%, while travel names suffered the weight of the damage, with cruise operators Carnival and Norwegian Cruise among the worst performers.

GRAPH: percentage of changes of the best and worst performers of S&P 500 for 2020 –

According to Refinitiv data, Tesla was by far the most quoted, accounting for nearly 7 cents on every dollar, on average every day.

GRAPH: Tesla dominated 2020 in Wall St trading –

The rise in low-cost, easy-to-use commercial applications triggered a flood of money from retail investors in stocks and helped fuel a crop year for new stock offerings. Retail investors have accounted for up to 25% of stock market activity this year, compared to 10% of the 2019 market, according to broker Citadel Securities.

GRAPH: Institutional investors gain strength in 2020 IPOs –