More Upside Ahead for S&P 500 in 2020, Says JP Morgan

The hustle and bustle of the holidays could open up to more gains in the S&P 500 for the new year as global investment firm JP Morgan is expecting 2020 to be a strong showing for U.S. equities.

“The business cycle should begin to gain stronger traction by early 2020, providing further room for market upside and continued style and sector rotation,” said Dubravko Lakos-Bujas, JP Morgan’s chief U.S. equity strategist. “We expect the rotation from Momentum into Value to persist as the global business cycle re-accelerates and puts upward pressure on bond yields and commodities.”

In fact, Lakos-Bujas “set his 2020 price target for the S&P 500 at 3,400, a roughly 8% gain from here. Betting on a limited U.S.-China trade deal and a reacceleration in the global economy, the analyst is more bullish than other Wall Street’s big equity strategists who see a modest 5% rise on average,” according to a CNBC report.

The major U.S. indexes have been sensitive to U.S.-China trade deal news, but Lakos-Bujas predicts that economic fundamentals will rise up through the market noise of trade wars. In addition, possible tariff rollbacks as well as investment activity should pick up on a global scale, which should further tamp down the effect of trade wars.

“Easier monetary and fiscal policies are in motion globally with majority of the benefits expected to flow through the economy in the coming quarters,” Lakos-Bujas said. “Global business sentiment should start to heal and help normalize investment activity including inventory restocking as fears related to US/China trade, Brexit, and other one-off shocks to large economies fade.”

For investors who suspect bullishness ahead for the S&P 500 can look to the SPDR S&P 500 ETF (NYSEArca: SPY).

Key features of the fund:

  • The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index (the “Index”)
  • The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors
  • Launched in January 1993, SPY was the very first exchange traded fund listed in the United States

Top 10 holdings as of Dec. 6:

  1. Microsoft Corporation: 4.43 %
  2. Apple Inc: 4.40 %
  3. Inc: 2.78 %
  4. Facebook Inc. Class A: 1.85 %
  5. Berkshire Hathaway Inc. Class B: 1.67 %
  6. JPMorgan Chase & Co: 1.65 %
  7. Alphabet Inc. Class C: 1.55 %
  8. Alphabet Inc. Class A: 1.53 %
  9. Johnson & Johnson: 1.42 %
  10. Visa Inc. Class A: 1.20 %

For more market trends, visit ETF Trends.