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Despite Current Flat Stocks Trading, 2020 will See ‘Great Rotation’, Says JP Morgan

On Monday, the stock market reached new highs: the Dow Jones Industrial Average gained 190.85 points (or 0.68%) and achieved 28,066.47 by the end of the day, the Nasdaq Composite increased by 1.32% up to 8,632.49, while S&P 500 gained 0.8%. The biggest gains have been made by technology and health care companies. Such companies as Amazon, Apple, Netflix, Intel, Alibaba, Tesla, Disney, and more have enjoyed growth in stocks. For example, Intel rose 2%, Amazon gained 1.61%, Gilead Sciences climbed 3%, and Nvidia rose 4.9%

These highs made new records and were mostly caused by the latest news concerning the U.S.-China trade war. The parties have approached finishing the conflict and closing the deal. Besides, it has been revealed the first phase of the deal will compass about 60% of the long-term agreement. The countries have also settled lifting a ban on exporting poultry meat from the U.S. and reached a consensus on monitoring import of fish products from the U.S. Moreover, China cracked down on intellectual property violations.

Today, there are no significant changes in the market, and traders are struggling to hold yesterday’s prices.

In the morning, Dow Jones Industrial Average (DJIA) futures took a minor slide by 11 points, which made the opening of the stock market a kind of tense. S&P 500 futures and Nasdaq Composite futures also started trading. However, DJIA is up, if analyzing the whole year’s movement.

David Kelly, the chief global strategist at JP Morgan Asset Management, believes that investors are anxious about the general slowing growth of the economy worldwide.

He said:

“People are still nervous about the rest of the world. All of this is sort of acting as funnel, directing cash into U.S. equities.”

“It’s a battle between nervous businesses and confident consumers”, added he.

At the same time, the American multinational investment bank and financial services company is optimistic about stocks in 2020. As JP Morgan has explained, “great rotation” is possible, which means large sums of money will be entering the stock market next year. The company has pointed out that the movement of equities will be driven by retail rather than institutional investors.

Hans Goetti at HG Research has supported JP Morgan, saying that the stock market’s ‘path of least resistance is up.’ He noted:

“For now, there’s no need to change any strategy… The main reason our equities are going up has to do with central bank policies. Don’t forget the Fed has cut rates three times since June. It has also added $280 billion to its balance sheet with interventions in the repo market. That’s another 50 basis points cut effectively.”

Despite the flat trading of stocks, Bitcoin continues to rise. The growth is slow but notable if compared with the results demonstrated yesterday. The most volatile and famous coin rose back above $7,000 to hit $7,146.96. Currently, its market cap makes up $129.1 billion. It all makes some experts believe that Bitcoin, as well as gold, can be considered as an option for investment while stocks are a too risky solution these days.

Despite Current Flat Stocks Trading, 2020 will See ‘Great Rotation’, Says JP Morgan

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