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U.S. stocks closed 2020 on a strong note, and many investors are betting that the party will continue after a tumultuous year, marking the end of both the longest bull market and the short-term bear market ever.
Risks, including recurrent coronavirus epidemics, are met, with concerns about the pace of January vaccines and high-risk rollout. 5 U.S. in Georgia for balance of power in Congress. Senate runout. Still, many investors have seen these threats in the past.
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“We see stocks in the early stages of the multi-year bull run,” said Peter Assel, head of Commonwealth Financial Network’s portfolio portfolio management. “We continue to see increasing pressure.” “
The options market is more volatile in January compared to December due to the Georgia election. If Republicans win at least one Senate seat, they will retain a slim majority.
If the Democrats win the dual run-up, the chamber will split 0-0 and the tie-breaking vote will go to Vice President-elect Kamala Harris, giving President-elect Joe Biden’s party full influence over Congress. This raises the possibility of tax reform proposals, which many investors fear will hurt stock prices.
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Still, most investors aren’t looking for a sharp pullback next year. The December fund manager survey of Bofa Global Research was the most bullish.
U.S. The rollout of the coronavirus vaccine has given investors a boost, said strategists who have expressed interest in adapting to Federal Reserve policy.
Indeed, in the last two months the U.S. The stock market boom may have taken off surprisingly well. In a poll in late November, strategists expect the S&P 500 to close at 3,900 by the end of 2021, an annual increase after the index rises about 16.3% this year to 3,756.07.
The year 2020 was a wild one for Wall Street, with the tightening of equities by the Covid-19 shutdown ending the longest bull market in history, and a bungee-cord rebound on hopes of an economic recovery that was the result of a short cut. Bear market on record.
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In previous bull markets, when the S&P 500 hit its previous bullish market high, the index grew 38% before topping out in a 26-month period, according to data from Bespoke Investment Group.
Some investors disrupt COVID-19 recovery and its value may already be up and valuations may be stretched. The S&P 500’s 12-month forward price-earnings ratio is currently around 22, above its long-term average of 15.
Still, investors look at many segments of the market, including financial, leisure and hospitality stocks and energy releases with bullish prospects.
“The overall market doesn’t seem to be overbought,” said Tim Giskey, chief investment strategist at Inverness Council.
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Investors are optimistic about a surge in corporate earnings in search of continued growth.
“Earnings will be used as confirmation of current prices,” Assel said.
The S&P 500 company’s revenue is forecast to grow by about 23% in 2021 compared to 2020.
The top five S&P 500 components in the first nine months of the year, which accounted for 127% of the index’s returns in the first nine months of the year, according to BlackRock calculations, are worrisome for investors in most of the year.
According to Bespoke, the technology currently weighs 28% in the S&P 500, more than 10% of its historical historical average since 1990.
“What we saw in November and December is that the market has already started to expand … out of tech stocks in Max stocks,” said John Praveen, portfolio manager at PGIM company QMA, pointing to the strong performance in value stocks. , Shares of small caps and non-US stocks.
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Investors said gold could continue to be driven by some high-flying growth names.
“Don’t count growth companies with strong and emerging business models that can meet or exceed high shareholder expectations,” said Tony Disprito, chief investment officer at US Fundamental Active Equity for BlackRock.
Investors are watching the “light at the end of the tunnel” as vaccines are deployed, Praveen said, adding that this year’s Lag Guard stocks and sectors will join the rally in 2021.
Praveen said, “This is like firing your car on all cylinders … it’s a very comprehensive and healthy rally.”
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(Reporting by Saqib Iqbal Ahmed; Editing by Megan Davis, David Gregorio and Chris Reese)
