U.S. actions in 2020: a year for history books

NEW YORK (Reuters) – The year 2020 was a wild one for Wall Street, marked by the end of the biggest bull market in history with the fall of shares due to the closing of the COVID-19 and a rebound in the elastic rope in hopes of a rebound economy that resulted in the smallest bass market ever recorded.

ARCHIVE PHOTO: raindrops hanging on a Wall Street sign outside the New York Stock Exchange in Manhattan in New York City, New York, USA, October 26, 2020. REUTERS / Mike Segar

After closing at a record high on February 19, stocks fell a month-long as the coronavirus pandemic and related government blockades 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 biggest percentage drop in the benchmark since the fall of “Black Monday” in 1987, fell 26.7% from the February high and confirmed a bearish market, widely seen as a decline of more than 20% from a high.

But the fall only lasted until March 23, when the S&P hit rock bottom. It surpassed its February high on August 18, marking the start of a new bull market. The 23 trading days of a bear market were the shortest of all times.

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

GRAPHIC: S&P 500 in 2020 –

Along with $ 2 trillion in fiscal stimulus from the U.S. government to sustain a declining economy, one of the main reasons for the stock recovery in March was the monetary stimulus measures provided by the Federal Reserve, which announced a series of programs to support the economy on March 23

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

GRAPHIC: S&P dividend yield vs 10-year Treasury –

As stocks continued to recover and vaccine developments became more promising, investors began to turn to companies that historically outperform as the economy comes out of recession, that is, small caps, and to cyclical sectors, such as energy, materials, industrial and financial, in the latter part of the year.

With a large share of cyclical names comprising “value” stocks, the group began to close the gap in what had been a period of underperformance for “growth” names. The style of value has never fully restored dominance, but the momentum behind the technology stocks that led the upturn was enough to leave growth performing better this year.

GRAPHIC: 1 year spread between growth and value stocks –

But even with the highest momentum at the end of the year, the energy sector ended up having the worst performance by a large margin in 2020, while technology and discretionary consumption led the rise.

GRAPHIC: Performance of the S&P 500 sector in 2020 –

In short, pandemic-related uncertainty and fear have made the S&P 500 more volatile year in more than a decade, with the index rising or falling 2% or more in more than 40 sessions.

GRAPHIC: Wall Street whiplash –

As for individual stock performance, Tesla jumped to the top position when it was added to the S&P 500 index on December 21. It gained 743% in the year.

The impact of coronavirus was evident, with actions that benefited from the “stay at home” environment, such as the Etsy online market, rising by around 300%, while travel names suffered the most damage, with cruise operators Carnival and Norwegian Cruise among the worst performers.

GRAPHIC: Percentage changes of the best and worst performances of the S&P 500 for 2020 –

Tesla was by far the most traded, accounting for almost 7 cents on the dollar, on average, each day, according to data from Refinitiv.

GRAPHIC: Tesla dominated 2020 in Wall St negotiations –

The rise in easy-to-use, low-cost trading apps has sparked a flood of money from the retail equity investor and has helped fuel a decisive year for new equity offerings. Retail investors accounted for up to 25% of stock market activity this year, up from 10% of the market in 2019, according to brokerage Citadel Securities.

GRAPHIC: Institutional investors earn big in 2020 IPOs –

Reporting by Chuck Mikolajczak; additional reporting by Noel Randewich; Editing by Alden Bentley and Jonathan Oatis

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