The headlines of Fox Business Flash are here. See what clicks on FoxBusiness.com.
US equities closed strongly in 2020, with many investors betting that the party will move on to a turbulent year that has meant both the end of the longest bull market and the short-lived bear market ever.
There are major risks, including an emerging coronavirus pandemic, concerns about the speed of vaccine explosion and high-interest January 5, the U.S. Senate’s runoff in Georgia for the balance of power in Congress. Yet many investors look beyond these threats.
GET FOX BUSINESS ON THE GO by clicking here
“We are going to continue to raise money,” said Peter Essele, head of portfolio management at Commonwealth Financial Network, which saw shares in the early stages of a multi-year bull run.
The options market priced more volatility in January than December, probably due to the Georgian election. If Republicans win at least one Senate seat, they will retain a slim majority.
If the Democrats sweep the double whammy, the chamber will be split 50-50 and will give the voting vote to Kamala Harris, under-elected vice-president, which will make presidential election Joe Biden’s party fully valid. This increases the possibility of tax reform proposals that many investors fear would hurt share prices.
CFOs IN 2021 KEEP AN EYE ON THESE 10 THINGS
However, most investors are not looking for a sharp pullback next year. BofA Global Research’s fund manager survey in December was the best.
The implementation of coronavirus vaccines has encouraged investors, along with the U.S. Federal Reserve’s willingness to accommodate policies, strategists said.
The boom in the US stock market over the past two months has indeed surprised even bulls. A poll at the end of November found that strategists expected the S&P 500 to end at 20,900 at 20,900. This is another annual increase after the index rose by about 16.3% this year to 3,756.07.
The year 2020 was a wild year for Wall Street, discussed towards the end of the longest bull market in history, with stock crashing through the COVID-19 shutdowns, and a setback in hopes of economic recovery being the shortest result had. bear market on record.
CHINA WARNINGS FOR REALIZATION FOR NYSE’S COMPANIES ‘COMPANIES
In previous bull markets, when the S&P 500 was high on its previous bull market, the index experienced an average gain of 38% during the 26-month period before it was plentiful, according to data from Bespoke Investment Group.
Some investors fear that the recovery of COVID-19 may already be priced and valuations may be stretched. The 12-month term-earnings ratio of the S&P 500 is currently around 22, well above the long-term average of 15.
Yet investors see several parts of the market, including financial, leisure and hospitality stocks and energy with potential to rise.
“The market generally does not look overbought,” said Tim Ghriskey, chief investment officer at Inverness Counsel.
MORE STOCK MARKETS EXPECTED AS CORONAVIRUS RECOVERIES IN 2021
BROADER RALLY
Investors looking for a continued rise are optimistic about the recovery in corporate earnings.
“The earnings will be used as a confirmation of the current pricing,” Essele said.
Earnings from the S&P 500 are forecast to increase by approximately 23% in 2021 compared to 2020.
For much of this year, increased market concentration has been a worrying concern for investors, according to the top five S&P 500 ingredients which, according to BlackRock’s calculations, achieved 127% of the index’s returns during the first nine months of the year. .
The weight of the technology in the S&P 500 currently stands at 28%, which according to Bespoke is more than ten percentage points higher than the historical average since 1990.
“What we saw in November and December is that the market is already starting to expand … beyond the technology stocks, the mega stocks,” said John Praveen, portfolio manager at QMA, a PGIM company, pointing out a strong performance by value stocks. , shares of small companies and non-US shares.
DOW, S&P 500 WRAP 2020 WITH RECORDS, TESLA CROSS $ 700 LEVEL
Investors say the golden run could continue through some strong-growing names.
“Do not list the growth companies with dominant and emerging business models that may continue to meet or exceed the high expectations of shareholders,” said Tony DeSpirito, chief investment officer of US Fundamental Capital Equity for BlackRock, in a note.
With the use of vaccines, investors are looking at ‘the light at the end of the tunnel’, said Praveen, who expects the remaining stocks and sectors to join the protest in 2021 this year.
“Think of it when your car shoots on all cylinders … it’s a much wider, healthier rally,” Praveen said.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
(Reporting by Saqib Iqbal Ahmed; Editing by Megan Davies, David Gregorio and Chris Reese)