US equities in 2020: a year for the history books

NEW YORK (Reuters) – The year 2020 was a wild year for Wall Street, discussed towards the end of the longest bull market in history, with stock crashes by the COVID-19 shutdowns, and a setback by the bungee cord hopes of economic recovery that led to the shortest bear market on record.

After the stock closed at a record high on February 19, the stock fell for a month as the coronavirus pandemic and related government lockout sowed panic over the damage to the economy in the United States and worldwide.

A 9.5% drop in the S&P 500 .SPX> on March 12, the benchmark index’s biggest one-day drop since the 1987 “Black Monday” crash, hit 26.7% of its high in February declines and a bear market is generally confirmed is seen as a decrease of more than 20% from a peak.

But the slide only lasted until March 23, when the S&P reached the bottom. It surpassed its peak in February on 18 August, which was the start of a new bull market. The 23 trading days of a bear market were the least ever.

The S&P closed at a record high on Thursday 2020, just like the Dow Jones industrial average, at 16.3% and 7.2% per annum respectively. The Nasdaq profit of 43.6% year-on-year was the largest for the technology index since 2009.

GRAPH: S&P 500 in 2020 –

Along with $ 2 billion in fiscal stimulus by the U.S. government to underline an economy, a major reason for the stock market upswing in March was the monetary stimulus measures delivered by the Federal Reserve, which announced a series of programs to economy on March. 23.

The Fed movements kept treasury yields low, which made equities more attractive to investors.

GRAPH: S&P dividend yield versus 10-year treasury –

As equities continued to recover and vaccine development became more promising, investors began to turn to companies that historically performed better as an economy moved out of recession, namely small capital, and to cyclical sectors such as energy, materials, industry and finance. , in the latter. part of the year.

With a large portion of the cyclical names containing “value” stocks, the group began to narrow the gap in a period of underperformance to “growth” names. The value style never fully restored dominance, but the momentum behind the technology stocks that led the march was enough to drive growth this year better.

GRAPH: One year spread between growth and value stocks –

But even with the rise late in the year, the energy sector performed the worst in 2020 by a large margin, while technological and consumer discretionary led the higher position.

GRAPH: S&P 500 sector performance in 2020 –

All in all, uncertainty and fear were linked to the pandemic that caused the S&P 500’s most volatile year in more than a decade, with the index rising 2% or more in more than 40 sessions.

GRAPH: Wall Street Whiplash –

In terms of individual stock performance, Tesla peaked when it was added to the S&P 500 index on 21 December. It rose 743% on the year.

The impact of the coronavirus was clear, with stocks benefiting from the “stay at home” environment, such as the online market Etsy, which collected about 300% while travel names suffered the most damage, with cruise ship operators Carnival and Norwegian Cruise the weakest performers.

GRAPH: Percentage changes of the best and worst S&P 500 artists for 2020 –

According to Refinitiv, Tesla was by far the most traded and averaged 7 cents of every dollar every day.

GRAPH: Tesla dominates 2020 in Wall St trade –

The rise of cheap, easy-to-use trading programs unleashed a flood of retail investors’ shares and offered a watershed year for new stocks. Small investors accounted for as much as 25% of stock market activity this year, up from 10% in 2019, according to broker Citadel Securities.

GRAPH: Institutional investors win IPOs in 2020 –