With the US-China “phase one” trade deal being signed, what’s the next catalyst for stocks?
As investors are watching the trade war coming to an end, and awaiting the USMCA deal getting signed into law, hopes for 2020 are more optimistic.
“The market is creeping its way higher as it awaits increases in earnings estimates,” said Sam Stovall, US equity strategist at CFRA Research, on the CNN Business digital live show Markets Now.
Besides earnings expectations, investors will also turn their attention to the possibility of another tax cut, Stovall said.
As stocks look for further gains in 2020, investors are keeping an eye on the presidential race. According to Stovall’s research, if the S&P 500 rises between July 31 and October 31 in an election year, the incumbent candidate wins 80% of the time. If stocks fall, the incumbent loses 88% of the time. “Investors don’t like uncertainty, and a new regime injects uncertainty,” he said.
Aside from the election, “the major headwind for 2020 is the possibility that inflation starts to pick up as the economy improves, as unemployment remains really low,” Stovall said.
That said, this week’s inflation data, which was on the lower side, has assuaged these worries for now.