Dec 20, 2019

The stock market's quiet end to 2019

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Data: Money.net; Chart: Axios Visuals

The S&P 500 rose half a percent on Thursday to top the 3,200 level for the first time.

The big picture: A year that saw equity prices whipsawed by trade war uncertainty and recession fears is ending (so far) on a relatively quiet note.

  • One sign of calmness: Volatility in short-end U.S. treasuries has plummeted, after "rocketing higher in late May 2019 on Trumpian uncertainty," as Arbor Research & Trading's Ben Breitholtz points out.
  • "Waning uncertainty and investors disregarding the repo-doomsayers has returned a sense of calm. If concern brews again, this will be one of the first place(s) it noticeably emerges."

What's next: Turning to 2020, the same threats that worried Wall Street analysts this time last year haven't completely vanished. A re-escalation of U.S.-China trade tensions is among the caveats that could knock bullish year-end S&P price targets off-course, analysts say.

What they're saying: "The rivalry between the US and China hasn't gone away. Investors will be alert for any sign that tensions are re-emerging, or either side is dissatisfied with the implementation of the Phase 1 agreement," UBS analysts wrote in a note on Thursday.

  • That firm predicts the S&P will end next year lower than where it's trading now, though most Wall Street analysts forecast more upside.

Go deeper: Asset managers urge caution in 2020

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Investors jump on the emerging markets bandwagon

Reproduced from TCW Group; Chart: Axios Visuals

A growing chorus of U.S.-based fund managers is betting that emerging market stocks and bonds are poised to outperform U.S. assets this year. The momentum for emerging markets has grown so strong that it has become almost a consensus trade, with investors even urging clients to buy EM junk bonds.

What's happening: Following 2019's blowout returns for U.S. stocks and strong performance for high yield, government and even municipal bonds, investors expect U.S. assets to fall to earth in 2020 and are positioning in emerging markets.

Go deeperArrowJan 14, 2020

Middle East tensions could spark a big year for defense stocks

Data: Money.net; Chart: Axios Visuals

Defense sector stocks have predictably seen major buying since the killing of Iran Gen. Qasem Soleimani, in particular Northrop Grumman and Lockheed Martin.

Why it matters: The gains may not be temporary, analysts say.

Go deeperArrowJan 8, 2020

Wall Street has its best year since 2013

Data: FactSet; Chart: Axios Visuals

Wall Street had its biggest annual gain in six years — with the S&P 500 rising 29% and the Nasdaq Composite rising 35% in 2019. The Dow lagged behind other indices, but saw its biggest yearly gain since 2017.

Why it matters: U.S. stocks rebounded from 2018's year-end meltdown to log impressive gains, despite uncertainty stemming from the trade war and a slowdown in economic growth.