Welcome to the last trading week of 2020, a year we can’t see the back of fast enough. Stocks are higher after President Donald Trump signed that $900 billion stimulus bill, despite 11th hour demands for bigger relief checks. With just a handful of trading days before the year finishes, our call of the day says investors need to brace for a bumpy start to 2021 if we close out the year with stock-market records. It’s been an “unprecedented year for financial assets,” with equity markets melting down earlier this year on the COVID-19 pandemic, followed by an impressive surge as authorities poured on the stimulus, notes John Hardy, head of FX strategy, at Saxo Bank. “Market historians looking back to another incredible year—1999—in which the S&P 500 closed the year at a new all-time high, will recall that the initial few days of the year 2000 saw a vicious correction. Yes, times were different, and the focus then was on Y2K and the concentrated bubble of the time, but investors need a reminder that even during major bull market runs, one can see significant setbacks,” Hardy said, in a note to clients that published Monday. Fresh closing highs hardly look like a far-fetched idea for Monday’s session. On Thursday, the S&P 500 closed just 0.5% off its record close of 3722.48 seen December 17. Stock futures are indicating the S&P may not open too far away from that level.
Others have discussed ominous parallels between this market and 1999. The S&P 500 finished that year up 19%, but fell 10% in 2000. That’s as market bears remain tough to find these days, with a median year-end price target for the S&P 500 of 4,027.21 among Wall Street’s big forecasters.
Stocks DJIA, +0.68% SPX, +0.87% COMP, +0.74% are moving higher. European markets SXXP, 1.09% are up, helped as well by last week’s post-Brexit trade deal, which is giving sterling GBPUSD, 0.23% a big boost. London stocks are closed for an extended bank holiday. Asian markets mostly rose, and bitcoin BTCUSD, 0.30% is hovering at $26,000, after topping a record $28,000 over the Christmas weekend. President Trump signed the stimulus bill, but also said Congress would vote on lifting individual stimulus payments to what he wanted — $2,000—from the agreed $600. House Speaker Nancy Pelosi said she would hold another vote on Monday, but Republicans blocked such an effort last week.
The EU’s COVID-19 vaccine campaign kicked off over the weekend. U.S. officials are “very seriously” looking at a new strain of the virus in the U.K., says the government’s top infectious disease expert, Dr. Anthony Fauci. He also warned of a possible “surge upon a surge” after Christmas in the U.S. Nick Note: I want to be clear here. I see a major epic record stock market crash. I believe this crash is eminent and recommend we position ourselves accordingly