New York (AFP)
"The year of all extremes" on Wall Street, summarizes, concisely, Quincy Krosby, head of market strategy at Prudential Financial.
From the wind of panic that blew on the American stock market with the arrival of the virus to the hope of a light at the end of the tunnel with the start of vaccinations, back on the great moments of a stock market year punctuated by the health crisis and economical.
- March: crash -
After rather calm January and February, Wall Street suddenly collapsed in March, frightened by the spread of the coronavirus and its consequences for the world's largest power.
The major New York indices took water, the Dow Jones experiencing the worst session in its history on March 16 (-13%) after the Great Depression of 1929 and the stock market crash of October 1987.
This tumble made Wall Street turn, in mid-March, into "bear market", a term in stock market jargon characterizing a fall of more than 20% compared to the last record.
The prospect of a paralysis of the US economy and the fear of a liquidity crisis have cooled investors.
"If companies can't raise the money to survive, they go bankrupt or lay off and the unemployment rate soars," says Krosby.
However, the business community quickly found a smile, reassured by the accommodating monetary policy of the Federal Reserve, which continued to lower its key rates and launched a vast program of asset purchases.
Also reassured by the rapid intervention of the government, which voted at the end of March a gigantic stimulus plan of 2.200 billion dollars.
- From April to September: lift -
Wall Street's recovery was confirmed in the spring and accelerated in the summer as the economy reopened, with the market recovering in August to levels close to pre-pandemic levels.
Drivers of this growth, the tech giants have experienced a meteoric rise: between April and September, the titles of Alphabet (the parent company of Google), Facebook, Amazon, Microsoft and Apple soared, with the winning iPhone maker. more than 80% over this period.
The attraction of these groups is explained, according to Ms. Krosby, by the fact that "they are reputable companies, the best in their categories and that the demand for their products and services is strong".
Other names, until then less known to the general public, have entered the breach opened by the Covid, including the Zoom videoconferencing platform, which has flourished with the generalization of teleworking.
Brands of cleaning products (Procter & Gamble, Clorox) or food products (Hershey, Hormel) have also performed well.
Small carriers have invested heavily in the stock market during lockdowns, contributing to the rise of popular stocks like Tesla's.
During this time, the pandemic continued its destructive work, the human toll increasing and the recession settling in at the end of July in the United States.
On the stock market, the sectors most affected by the restrictions to contain the virus have suffered: cruise lines, oil majors, airlines, casinos and hotels.
- November: farewell to Trump -
From September, the market turned its attention to the US presidential election, marked by the upsurge in cases of contamination and the frantic race for vaccines.
The November 3 election ended in the victory of Democrat Joe Biden and the defeat of Donald Trump, who had made the good health of Wall Street one of his main campaign arguments.
While U.S. voters denied the Republican billionaire a second term, Wall Street hit new heights under his presidency, with the Dow Jones closing above 30,000 points for the very first time on November 24.
The Trump administration's tax reform, enacted at the end of 2017, was a turning point for large companies, which saw the amount of their taxes decrease.
"There was a realization that if tax rates were lowered, profits would rise exponentially," said Gregori Volokhine, president of Meeschaert Financial Services.
The main black spot of the Trump era for Wall Street will undoubtedly remain the worsening of the trade war with China, so the activity of many American groups depends in part on relations between Washington and Beijing.
- 2021: trends -
The launch of the vaccination campaign in the United States heralds better days for the American economy and promises a bright future for the health sector on the stock market.
At the forefront in the development of treatments and vaccines against Covid-19, biotechs like Moderna or Regeneron, should continue to progress.
Large IT groups should capitalize on the growing demand for technologies such as remote computing ("cloud"), artificial intelligence or 5G.
The environment, a priority for the new Biden administration, should also interest many investors.
© 2020 AFP