So, what will happen to the U.S. stocks after a year of bull market in the next 2020?
On the last trading day of 2019, the Dow rose 0.27% to 28536.2, the S & P 500 rose 0.29% to 3230.53, and the NASDAQ rose 0.3% to 8972.6. According to wind data, the S & P 500 index rose 2.86% in December, its best performance in the same period since 2010, with the Dow up 1.74% and the NASDAQ up 3.54%. In the fourth quarter, the S & P 500 index rose 8.53%, the Dow 6.02% and the NASDAQ 12.17%. In 2019, the Dow rose 22.34%, the S & P 500 rose 28.88%, and the NASDAQ rose 35.23%. The NASDAQ and S & P 500 both posted their biggest annual gains in six years.
Technology stocks are the main force supporting the market. On the last trading day of 2019, large-scale technology stocks in the United States rose collectively, with apple up 0.73% and 88.96% annually, the largest increase in 9 years. The share price also reached a record high, with a total market value of $1.3 trillion. Buffett made a lot of money in this stock.
On the last trading day, Microsoft rose 0.07% and 58.21% year-on-year, eight years in a row, the largest annual increase in a decade, with a market value of $1.2 trillion.
In addition, on the last trading day, Amazon was up 0.05%, up 23.03% year-on-year, up five years in a row; Nye was up 0.08%, up 20.89%, up five years in a row; Google was down 0.02%, up 28.18% year-on-year; Facebook was up 0.41%, up 56.57% year-on-year.
However, this years bull market is not easy and unexpected. Because the year has been fraught with worries and fears from beginning to end: a global slowdown, a devastating trade war and potential mistakes in Fed policy.
Industry insiders generally believe that the main reason for the rise of the stock market in 2019 is that the policy of the Federal Reserve has changed dramatically. The Fed raised interest rates four times in 2018, including in December 2018, raising its key rate to 2.5%. But by 2019, the Fed changed its strategy and cut interest rates three times. The Feds key interest rate is now back in the range of 1.50% to 1.75%. In addition, the Fed said it expects interest rates to remain unchanged in 2020, which makes investors expectations clearer. The decrease of interest rate urges investors to seek income, forces more funds to enter into stocks with faster expected appreciation, and wins relatively high dividends or both.
Not only has the price of capital come down, but also the scale has come up. According to data from wind information, the Federal Reserve provided about $230 billion (1.6 trillion yuan) of liquidity by the end of the year in order to avoid financial strain. On Tuesday, the last overnight operation in 2019, the Federal Reserve will provide another $150 billion in overnight funds, although nearly $31 billion will be due that day.
The Fed injected a lot of liquidity into the market in 2019. In just four months, the size of the Federal Reserves balance sheet has increased by more than 400 billion US dollars, which has exceeded QE1, QE2 and qe3. Analysts believe that from a market perspective, although the Fed has always said that its position has not changed, the substantive qe4 has been opened. Recently, the U.S. dollar index shows a bear trend. The U.S. dollar index has fallen below the important level of 97. Flooding may be one of the most important reasons for the dollars sell-off.
How to interpret in 2020
2020 will be the year of American election. According to past experience, in the year of general election, stocks generally perform well. However, at this time, the U.S. stock market is indeed at a historical high. How to interpret it in 2020 remains a variable. From the background of 2019, we can also reverse this.
But the market will also place its hopes on the Fed. According to a report by Nicholas CORAS, co-founder of dartlek research, large U.S. stocks are at risk from 2020, by any objective measure. The valuation is high, and the level of corporate debt has reached a record high. But the Fed has learned its lesson. If necessary, it will ease soon, raising interest rates slowly, perhaps very slowly.
The second is that the U.S. stock market is indeed in a relatively high position. Both apple and Microsoft have set record highs. Although the quality of these companies is indeed very good, there are still doubts and differences on their valuation. Apples current forward-looking P / E ratio is just under 22 times, the highest ever. The price earnings ratio of other technology giants is not low. Amazons P / E ratio in 2019 is more than 80 times, Facebooks is more than 32 times, Microsofts is more than 29 times, and Googles parent company, alphabet, is more than 28 times.
Paul Meeks, a technology investor, recently said Apples share price was overvalued by at least $100. According to his calculations, the iPhone makers share price is well below the current $290. He expects apple to release some disappointing results in the next year or so, and the iPhone business continues to deteriorate, which will lead to a sharp correction in the stock price. However, jeriel ong, an analyst at Deutsche Bank, said that investors had previously thought iPhone sales would decline year by year, but market sentiment had improved, with the market generally expecting a new growth cycle for 5giphones.
Source: Securities Company China Author: Shi Qian editor in charge: Yang Bin Gu nf4368