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发帖数: 11530 | 1 Investors are convinced the stock market party will continue in 2021
Saqib Iqbal Ahmed
Sun, January 3, 2021, 7:23 AM CST
By Saqib Iqbal Ahmed
NEW YORK (Reuters) - U.S. stocks closed 2020 on a strong note, and many
investors are betting the party will continue after a tumultuous year that
marked both the end of the longest bull market and the shortest-lived bear
market ever.
Risks abound, including a resurgent coronavirus pandemic, concerns about the
speed of rollout of vaccines and high-stakes Jan. 5 U.S. Senate runoffs in
Georgia for the balance of power in Congress. Still, many investors are
looking past these threats.
"We are going to continue to see a push higher," said Commonwealth Financial
Network's head of portfolio management, Peter Essele, who sees stocks in
the early stages of a multi-year bull run.
The options market is pricing in more volatility in January than December,
likely due to the Georgia elections. If Republicans win at least one Senate
seat, they will maintain a slim majority.
If Democrats sweep the dual runoffs, the chamber would be split 50-50 and
the tie-breaking vote would go to Vice President-elect Kamala Harris, giving
President-elect Joe Biden's party full sway over Congress. That raises the
possibility of tax-reform proposals that many investors fear would hurt
stock prices.
Still, most investors are not looking for a sharp pullback next year. BofA
Global Research's December fund manager survey was the most bullish.
The roll out of coronavirus vaccines has emboldened investors, along with
the U.S. Federal Reserve's expressed readiness to keep policy accommodative,
strategists said.
Indeed, the U.S. stock market's rally over the last two months may have
taken even bulls by surprise. A late November poll found strategists
expected the S&P 500 to end 2021 at 3,900, which would be another annual
rise after the index rose about 16.3% this year to 3,756.07.
The year 2020 was a wild one for Wall Street, bookended by the end of the
longest bull market in history with the battering of equities by the COVID-
19 shutdowns, and a bungee-cord rebound on hopes for economic recovery that
resulted in the shortest bear market on record.
In prior bull markets, when the S&P 500 takes out its previous bull market
high, the index has experienced a median gain of 38% over the span of 26
months before topping out, according to Bespoke Investment Group data.
Some investors fret the COVID-19 recovery may already be priced in and
valuations may be stretched. The 12-month forward price-to-earnings ratio of
the S&P 500 is currently about 22, well above its long-term average of 15.
Still, investors see several parts of the market, including financials,
leisure and hospitality stocks and energy with potential to rally.
"The market, overall, does not seem overbought," said Tim Ghriskey, chief
investment strategist at Inverness Counsel.
BROADER RALLY
Investors looking for a continued rally are optimistic of a rebound in
corporate earnings.
"Earnings are going to be used as a confirmation of current pricing," Essele
said.
S&P 500 company earnings are forecast to increase about 23% in 2021 compared
with 2020.
For much of this year increased market concentration has been a nagging
worry for investors, with top five S&P 500 constituents generating 127% of
the index’s return during the first nine months of the year, according to
BlackRock's calculations.
Technology’s weight in the S&P 500 currently stands at 28%, up more than 10
percentage points from its historical average since 1990, according to
Bespoke.
"What we saw in November and December is that the market already started
broadening out ... beyond the tech stocks, the mega stocks," said John
Praveen, portfolio manager at QMA, a PGIM company, pointing to a strong
showing by value stocks, shares of small caps and non-U.S. stocks.
The golden run by some high-flying growth names could continue, investors
said.
"Do not count out those growth companies with dominant and emerging business
models that can continue to meet or exceed lofty shareholder expectations,"
said Tony DeSpirito, chief investment officer of U.S. fundamental active
equity for BlackRock, in a note.
With vaccines being deployed investors are looking at "the light at the end
of the tunnel," said Praveen, who expects this year's laggard stocks and
sectors to join the rally in 2021.
"Think of it as your car firing on all cylinders... it's a much broader,
healthier rally," Praveen said.
(Reporting by Saqib Iqbal Ahmed; editing by Megan Davies, David Gregorio and
Chris Reese) | W***n
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