US Stocks in 2020: A Year for the History Books

NEW YORK (Reuters) – The year 2020 was a wild year for Wall Street, which ended at the end of the longest bull market in history with the stock pounding of recovery resulting in the shortest bear market ever.

After closing at an all-time high on Feb. 19, stocks plummeted for a month as the coronavirus pandemic and associated government lockdown sparked panic over the damage to the economy in the United States and worldwide.

A 9.5% decline in the S&P 500 .SPX> on March 12, the benchmark index’s largest one-day percentage drop since the 1987 Black Monday crash, resulted in a 26.7% decline from its highest point in February and confirmed a bear market widely. seen as a drop of more than 20% from a peak.

But the slide only lasted until March 23, when the S&P hit rock bottom. It went beyond the February high on August 18 and marked the start of a new bull market. A bear market’s 23 trading days were the fewest ever.

The S&P ended 2020 at a record high on Thursday, as did the Dow Jones Industrial Average, with annual gains of 16.3% and 7.2% respectively. The Nasdaq’s 43.6% year-over-year increase was the largest for the tech-heavy index since 2009.

GRAPH: S&P 500 in 2020 –

Along with $ 2 trillion in fiscal stimulus from the U.S. government to support a weaker economy, a major reason for the stock’s recovery in March was monetary stimulus measures from the Federal Reserve, which announced a series of programs in March to boost the economy backstop. 23.

The Fed’s measures kept government bond yields low, making stocks more attractive to investors.

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

As stocks continued to rebound and vaccine developments became more promising, investors began to rotate to companies that have historically outperformed as an economy emerges from recession, namely small caps, and to cyclical sectors such as energy, materials, industrial and financial services, in the latter sector. . part of the year.

With much of the cyclical names consisting of “value” stocks, the group began to close the gap in what has long been a poor performance against “growth” names. Value style never fully restored dominance, but the momentum behind the technology stocks that led the rally was enough to leave growth this year with the better performance.

GRAPH: 1-year spread between growth and value stocks –

But even with the push higher late in the year, the energy sector finished by a wide margin as the worst performer in 2020, while technology and consumer cyclists led the way.

GRAPH: S&P 500 sector performance in 2020 –

Overall, the uncertainty and fear associated with the pandemic made it the most volatile year for the S&P 500 in more than a decade, rising or falling 2% or more in more than 40 sessions.

GRAPH: Wall Street whiplash –

In terms of individual stock performance, Tesla jumped to the top spot when it was added to the S&P 500 index on December 21. It posted 743% on an annual basis.

The impact of the coronavirus was clear, with stocks benefiting from the ‘stay-at-home’ environment, such as the online marketplace Etsy, rallying about 300%, while travel names took the brunt of the damage, with cruise ship operators Carnival and Norwegian Cruise among others the worst performers.

CHART: Change rate of the best and worst S&P 500 performers for 2020 –

Tesla was by far the most traded, accounting for nearly 7 cents of every dollar, on average every day, according to Refinitiv data.

GRAPH: Tesla Dominated 2020 in Wall St Trading –

The emergence of low-cost, easy-to-use trading apps sparked a rush of money from retail equity investors and helped set a turning point for new stock offers. According to broker Citadel Securities, private investors accounted for a whopping 25% of the activity in the stock market this year, up from 10% of the market in 2019.

GRAPH: Institutional Investors Win Big Awards in IPOs in 2020 –