US Stock Market Forecast For 2020

Investors want to get a handle on the US stock market forecast for 2020 after stock prices rose in excess of 30% in 2019. The gains in the past year resulted solely from an expansion of the price-to-earnings valuation metric as growth in earnings proved elusive. Investors are now worried about the longevity of the bull market. What is AlphaProfit’s US stock market forecast for 2020?

The US economy fared reasonably well in 2019.

The unemployment rate declined to a multi-decade low of 3.5% from 4.0% at the start of the year.

US gross domestic product grew a strong 3.1% in the first quarter. Although the pace of growth slowed, it remained healthy growing at or in excess of 2.0% in the second and third quarters.

S&P 500 member companies had a tough time growing their earnings in 2019 after their 2018 tally received a one-time boost from lower corporate income tax rates. According to FactSet, S&P 500 member earnings grew less than 1.0% in the first and second quarters of 2019 and declined 1.6% in the third.

The Federal Reserve reversed its stance on interest rate policy in 2019 after hiking interest rates in 2018. As threats to continued global economic expansion rose from the trade tariff war between the US and China, the Fed lowered interest rates thrice in 2019. The federal funds rate now stands at 1.75% after starting the year at 2.5%.

Popular large-cap benchmarks, the S&P 500 and the Dow Jones Industrial Average rose 31.5% and 25.3%, respectively while the small-cap Russell 2000 benchmark gained 25.5% in 2019.

US Stock Market Forecast: S&P 500 Index in 2019

Most of the gains in the S&P 500 in 2019 accrued during the first and fourth quarters. Register to learn how AlphaProfit model portfolios performed in 2019.

Stocks rebounded in the first quarter from the selloff in the fourth quarter of 2018 as trade negotiations between the US and China progressed and the Federal Reserve took a patient stance in determining future interest rate increases.

During the second and third quarters, stock prices were range-bound as trade talks progressed in fits-and-starts and the Federal Reserve cut benchmark interest rates.

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