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S&P Index's YTD Return Is in the Black for 2020 — Will It Stay That Way?

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The S&P 500 Index — a measure of the stock performance of 500 large and publicly-traded companies in the U.S. — is a good indicator of the state of the economy. It's a promising sign that the S&P Index YTD for 2020 is back in the black after experiencing a nosedive earlier this year.

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Some business leaders are braced for more bad news in the last few months of the year. Webull CEO Anthony Denier told Business Insider in October that the S&P could dip back down to 3,000 if lawmakers don’t agree on another economic stimulus.

“Without stimulus, demand may dry up, which could have a huge negative effect on the economy,” Denier explained. “The lack of a deal could take away a lot of the stock market’s optimism and could send the S&P down another 10 percent.”

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Why has the S&P dropped in 2020?

The S&P 500 index dropped precipitously in March amid the coronavirus-related market crash. After hitting a peak in mid-February, the S&P plunged 34 percent and bottomed out at 2,237. The S&P 500 made its “fastest-ever plunge into bearish territory,” according to Business Insider

Luckily, the Federal Reserve announced relief measures on the same day. The S&P started its comeback andfully recovering from its year-to-date losses by June 8. The index reached a new peak of 3,580 on Sept. 2.

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“This is, in part, a reflation story. The market sees conditions as ripe for a strong and sustainable period of economic recovery,” Lauren Goodwin, an economist and multi-asset portfolio strategist at New York Life Investments, told Business Insider in June. “It’s also become a story of defeating COVID-19. Beyond the traditional cyclical upswing, we saw a strong rotation into companies and sectors most deeply impacted by the virus.” 

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What is the S&P 500's YTD return in 2020?

As of Oct. 2, the YTD return for the S&P 500 Index was 3.64 percent.

Bank of America strategists have cut their year-end forecasts for the S&P 500 two times this year, according to Reuters reports. Their latest forecast has the index ending the year at 3,250. Savita Subramanian, Bank of America's U.S. equity chief, said that the “range is wide” for the index’s year-end target price. He told colleagues in a memo in September that the index could end somewhere between 2,200 and 4,000, according to Reuters.

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What was the S&P Index's rate of return in 2019?

The S&P 500 Index ended 2019 up 28.88 percent, which was its best yearly return rate since 2013. The index was buoyed by the performance of its technology sector. 

“Technology performed well,” J.J. Kinahan, a chief strategist with TD Ameritrade, told the Associated Press. “There was a huge fear going into the year that technology was going to suffer considerably because of tariffs, yet at the end of the year Apple is the leading stock in the Dow.”

At the time, experts were optimistic about 2020. “We had a remarkable year of returns in the stock market,” Keith Buchanan, a portfolio manager at Globalt Investments, told the Associated Press. “Things are much different going into 2020 than they were going into 2019. … There are fairly rosy expectations and there’s not a consensus that a recession is coming in a very near term.”

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