The S&P 500, the index of 500 of the largest publicly traded companies in the United States, is widely followed and is often used as a bellwether for the U.S. economy. The index closed at 4,323.51 on October 30th, 2020, the highest it has ever been closing at over 1,000 points up from the close on April 6, 2020. This is a remarkable recovery and investors have raised the question if the S&P 500 can stay at or above the 4,300 level.
Can the S&P 500 hold the 4,300 level for 2020? Many analysts have been viewing 2020 with cautious optimism, as the massive recovery since April has almost brought the index to pre-COVID levels. The biggest question investors are facing today is whether the S&P 500 will be able to sustain these gains or if the index will go back down to the pre-COVID levels.
In order to answer this question, we need to look at the various factors that are contributing to the current market stability. The U.S. economy has shown impressive resilience throughout 2020, with low unemployment figures and strong consumer spending. Similarly, the Federal Reserve has taken unprecedented measures to support the economy. The Fed has purchased bonds in the form of quantitative easing, kept interest rates low and expanded its balance sheet. All of this has aided the stock market and has allowed the S&P 500 to reach new highs.
The other major factor influencing the market is the upcoming U.S. presidential elections. Analysts are debating whether the market will stay stable if either the incumbent President Trump or the opposition candidate Joe Biden win the election. If Trump wins, it is likely that the S&P 500 will maintain its current level, as Trump’s policies have been friendly to Wall Street. If Biden wins, the markets may see more volatility, due to the uncertainties around his proposed tax policies.
All in all, the future of the S&P 500 is uncertain. Although the index is currently near its all-time high, there are still a number of unknowns about the U.S. economy and the upcoming elections. The outlook for 2020 is positive, but investors should remain cautious in light of the potential risks.
