In 2020, the new crown epidemic became an unprecedented year. The U.S. stock market crashed rapidly in March, broke several times, and then soared rapidly, setting high records several times.
The god of speculation, Kostolani, said that the stock market and the economy are like a puppy and its owner. The economy is the owner, and the stock market is the dog. Even if the dog runs around, it will eventually be unable to escape the owner’s hands. The puppy is already ahead. Can the host keep up next year?
Since the March low, the S&P 500 has risen by more than 65%, the S&P has risen close to 16% so far this year, and the Nasdaq has risen about 44%. The skyrocketing U.S. stock market is in stark contrast to the slow economic growth. According to monthly data from the U.S. Department of Labor, many small businesses are struggling and more than 10.7 million Americans are unemployed.
Sam Stovall, chief investment strategist at CFRA, pointed out that the U.S. stock market is developing too fast due to the epidemic. We spent 33 days from peak to trough. The Federal Reserve and the US government immediately joined forces to rescue the market. Wall Street emphasized not to follow the Federal Reserve. On August 18, the main index of US stocks regained lost ground, and the recovery speed was unprecedented, and then US stocks continued to hit new highs.
In this regard, Michael Arone, chief investment strategist at State Street Global Advisors, said that the most important thing brought about by the epidemic is that the stock market is a forward-looking mechanism.
Michael Arone said that this is the theme of the whole year. Investors have been thinking and wondering why the stock market can perform so strongly in the face of such severe challenges in the economy, labor market and financial reports, because the stock market is more about the future. Expectations rather than the current situation.
U.S. stocks are at risk of correction next year
Under the background of repeated highs of major US stock indexes, the largest IPO boom since the dot-com bubble occurred. Investors involved in high-risk operations, concentrated positions, trading options and leveraged exchange-traded funds (ETFs), and retail investors’ margin debt reached history. The new high is not a good omen for the stock market.
Chris Rupkey, chief financial economist at MUFG Union Bank, said that the initial news of the recession seemed to have weighed on the stock market, but the economic recovery took much longer than the stock market.
Chris Rupkey pointed out that the only difference is that US stocks have reached a level that we have almost never seen. Since the Internet bubble burst in 2000, this has never seen a valuation. If the company wants to make a lot of money next year, the current position of the stock market is not a big problem.
Chris Rupkey predicts that it is not surprising that U.S. stocks will fall next year, and there may be a 10%-12% correction.
JJ Kinahan, chief market strategist at TD Ameritrade, said that everyone now has great expectations for the bull market, but the downside is can we really achieve it? After the world returns to normal, the epidemic stock Peloton (PTON-US) And Zoom (ZM-US) Can it continue to grow?
The COVID-19 pandemic has caused Wall Street funds to swarm the technology and epidemic prevention stocks such as home office and remote teaching, away from aviation and cruise stocks. With the advent of vaccines, investors have turned to buying cyclical stocks and value stocks.
Kinahan is bullish on leisure, entertainment and medical stocks next year, and believes that there will be huge market demand in the post-epidemic era.