The S&P is considered to be one of the best representations of the US stock market. It is an index that measures stock performances of the 500 companies listed on the stock exchanges in the United States.
In 2019, the S&P hit 19 new, all-time highs. This despite trade wars and impeachment hearings. However, these all-time highs seem to be following a general trend of all-time highs.
For example, there were 18 new all-time highs in 2018, 62 in 2017, 18 in 2016, 10 in 2015, 53 in 2014, and 45 in 2013.
It would seem that the stock market is not affected as much by geopolitics and who is president as it is affected by rising trends.
Some Factors in a Rising Stock Market Are Subtle
A positive factor in the stock market was that the US economy’s moderate expansion held steady and led to more optimism in trade on Wall Street.
Any fears that Wall Street had of a recession faded as stocks continued to rise because of good indicators like strong consumer spending, a robust labor market and what seemed to be recovery in the housing market.
More Reasons for Optimism
There were some political reasons for optimism. Several new trade deals were signed, including a revised North American trade agreement to replace NAFTA, and after long, off and on negotiations, a phase one trade deal was struck with China, which is expected to be finalized in the first week of 2020.
It isn’t just the US that has benefitted with a trade deal with China. The US/China trade war caused tension for the whole world, and this trade agreement was a boost for the whole global economy which was affected by international trade volumes.
The Federal Reserve is on hold, with no plans to cut interest rates in 2020 and won’t get involved unless inflation starts up, leading to a calmer Wall Street.
There is Always Something That May Affect the Stock Market
Since 1928, about 5% of all trading days for the US stock market saw new all-time highs. Which means either all-time highs are a normal part of the stock market, as they happen one out of every 20 trading days or, if 5% of all trading days close at all-time highs, then the other 95% of days are in drawdown, or peak-to-trough decline.
All-time highs are all about how you look at them. If you are investing in the stock market, you should know that in the long term, stocks mostly go up over a period of time and all-time highs will be part of that, too. But eventually one of these highs will be the top, and it is impossible to know which high that will be.
What You Can Expect Going Into 2020
Now that tariff pressures have been somewhat relieved the market is optimistic that economic growth will continue, and stocks are expected to rise, but more modestly. There should be stable global economic growth.
Will there be another all-time high? Conditions seem good, but you never know.