The Most Surprising Stock Market Trends of 2020

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Apple job growth
Apple job growth

2020 has been a year for the books, mainly due to the global effects of the coronavirus pandemic. As a leading economic indicator, the stock market has predictably had a volatile year. Market participants have struggled to sort out the economic impact of the pandemic, as well as the likelihood of the development of a successful vaccine.

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Not all market moves in 2020 have been coronavirus-related, however. Some stocks have made news independent of the pandemic. Here’s a look at some of the most surprising market trends, both broad and narrow, of 2020.

Last updated: Dec 11, 2020

Tucson, AZ July 21, 2019: Walmart Store Building Sign.
Tucson, AZ July 21, 2019: Walmart Store Building Sign.

The Top 10 US Companies Are Unfathomably Huge — and Getting Bigger

Most Americans are familiar with the 10 biggest U.S. companies, or at least their products. The top 10 list of U.S. market cap leaders reads like a Who’s Who of the most popular brands in the world:

  • Apple

  • Microsoft

  • Amazon

  • Alphabet

  • Facebook

  • Berkshire Hathaway

  • Tesla

  • Visa

  • Walmart

  • Johnson & Johnson

What might be surprising is that with this year’s surge in valuations — combined with the growth of the underlying companies — these 10 U.S. stocks have a bigger combined market cap than any single non-U.S. stock market in the world. That’s an impressive statistic that neatly encapsulates just how powerful the top U.S. corporations are versus the rest of the financial world.

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A television screen headlines trading on the floor of the New York Stock Exchange,.
A television screen headlines trading on the floor of the New York Stock Exchange,.

Steepness of March Selloff

Perhaps it’s not surprising that the market sold off in March 2020, as the global effects of the pandemic became better-known. However, the steepness of the March selloff was nothing short of gasp-inducing. Just four trading days saw the market drop 6,400 points, the equivalent of about 26%. In 22 trading days, the market fell over 30%, making it the fastest market selloff of that magnitude in history.

Ultimately, the U.S. unemployment rate would jump over 20%, as widespread quarantines and stay-at-home orders essentially shut down the economy. The market being a leading indicator, the swift selloff seemed to portend these horrible times for the U.S. economy. Still, hardly a single market pundit anticipated such a dramatic selloff.

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Display of Stock market quotes with city scene reflect on glass
Display of Stock market quotes with city scene reflect on glass

Rapidity of Market Recovery

As impressive as the market selloff was, its recovery was nearly as breathtaking. While some economists anticipated a years-long bear market, stocks actually reached all-time highs in a staggeringly short period, In fact, the S&P500 recovered to new highs in just 126 trading days, the fastest such recovery on record. By way of recovery, the Dow Jones Industrial Average typically takes 1,438 trading days to make a new high after falling into a bear market.

In fact, 2020 saw 8 of the biggest single-day gains in Dow Jones Industrial Average history, many in rapid succession:

  • 3/24/2020: 2,117.72

  • 3/13/2020: 1,985

  • 4/6/2020: 1,627.46

  • 3/2/2020: 1,293.96

  • 3/4/2020: 1,173.45

  • 3/10/2020: 1,167.14

  • 3/17/2020: 1,049

  • 11/09/2020: 835

Clinical Trial - Vaccine: Covid-19, Coronavirus in vial with syringe on white background.
Clinical Trial – Vaccine: Covid-19, Coronavirus in vial with syringe on white background.

Speculation in Vaccine Stocks

Hindsight is always 20/20 in the stock market. Knowing how 2020 has gone, it makes sense that pharmaceutical companies — specifically, those that make vaccines — have gone haywire as the world desperately searches for an answer to the resilient virus. Companies like Novavax have become speculative darlings, as investors frantically place bets on who the “winning” company will be.

Novavax was nearly out of business just 18 months ago, with its shares trading below $1, but in 2020, the company was slated to receive $2 billion from the U.S. government to develop a vaccine. As of November 30, 2020, Novavax shares closed at $139.50.

This insatiable speculation for vaccine stocks has spilled over into other areas as well. So-Low Environmental Equipment, a maker of ultra-cold freezers, has seen demand for its products spike. That company was founded in 1959 and has never before seen this type of demand for its products, resulting in a complete depletion of its inventory.

Tesla store
Tesla store

Tesla’s Wild Ride

Tesla has always been the ultimate love-it or hate-it stock on Wall Street. The electric vehicle company and its colorful CEO Elon Musk have always been controversial. Some pundits see the company as visionary and a “must-own” into the future, while others maintain the company is a house of cards that can’t possibly sustain its valuation.

Regardless of which camp proves to be correct in the long run, no one could have predicted that massive explosion in Tesla’s stock price in 2020. As of the close on November 27, 2020, Tesla shares traded at $585.25, up an astonishing 600% year-to-date.

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Amazon Prime delivery truck
Amazon Prime delivery truck

Rise of COVID Stocks

In retrospect, the rise of a group of stocks benefitting from the stay-at-home trends forced on the world by the coronavirus pandemic makes sense. At the beginning of 2020, however, no one could have predicted that these stocks would be market leaders throughout 2020.

Take Zoom Videoconferencing, for example. Before 2020, video conferences were something of a necessary nuisance of office life. During the coronavirus pandemic, however, Zoom became an essential tool not only for conducting business but also for keeping friends and families in touch with one another. As a result, Zoom stock has skyrocketed nearly 600% year-to-date, as of November 27, 2020.

Zoom is not the only unexpected beneficiary of the “Covid economy” of 2020. Ecommerce companies including Amazon and payment transfer services including PayPal have also boomed during the pandemic.

Just out side of Weyburn, Saskatchewan, Oil pumps working away, Image taken from a tripod.
Just out side of Weyburn, Saskatchewan, Oil pumps working away, Image taken from a tripod.

Negative Oil Prices

Oil prices have had wild price swings over the years, but in 2020, the oil market did something never before thought possible — its price went negative. That’s right, in 2020, oil producers would pay you to take oil off their hands.

So, how does that happen exactly? Earlier in 2020, demand for oil was low as the global economy was crashing that refineries didn’t want any oil. The bottom line is that the oil glut was so huge that there was no place to store oil — and when you have a commodity that no one wants and you have no place to put it, it can have negative value.

Oil prices have hit single digits before, but no one could have predicted that oil prices would actually tip negative in 2020.

Las Vegas, Nevada, USA - May 24, 2014: The Neiman Marcus location on Las Vegas Boulevard in downtown Las Vegas, Nevada.
Las Vegas, Nevada, USA – May 24, 2014: The Neiman Marcus location on Las Vegas Boulevard in downtown Las Vegas, Nevada.

Bankruptcies, Bankruptcies, Bankruptcies

Although some retailers founder every year, in 2020 the black cloud of bankruptcy enveloped some of the nation’s most beloved stores. As of November, 2020, here’s just a partial list of well-known companies that filed bankruptcy:

  • Dean & Deluca

  • True Religion Apparel

  • J. Crew

  • Gold’s Gym

  • Neiman Marcus

  • JCPenney

  • Pier 1 Imports

  • Hertz

  • Tuesday Morning

  • 24 Hour Fitness

Many of the names on this list, which also includes Neiman Marcus and Brooks Brothers among others, are some of America’s most beloved. This broad range of bankruptcies shows just how deep the coronavirus recession extends.

Royal Caribbean Cruises
Royal Caribbean Cruises

Cruise Lines Sink

Before 2020, the nation’s three top cruise companies, Royal Caribbean, Carnival and Norwegian Cruise Line, seemed like they were poised for great things. Cruising had become more popular every year, and new ships were constantly pushing the boundaries of what a cruise could be.

When the coronavirus struck, the party ended for the cruise lines. All three companies suffered horrible stock losses. Norwegian Cruise Line, for example, fell from a 52-week high of $59.78 to a low of $7.03, a shocking 88% drop.

Although stock prices have recovered a bit, the companies are far from out of the woods. Whereas some businesses have been able to operate in a limited capacity, the cruise lines are still stuck at shore. In 2020’s third quarter, Carnival Corporation reported a loss of $2.86 billion, with no end in sight.

Warren Buffett speaks with Fox Business
Warren Buffett speaks with Fox Business

Buffett Bought Stocks Again

Warren Buffett, dubbed the “Oracle of Omaha,” is one of the world’s best-known investors. As CEO of Berkshire Hathaway, Buffett’s annual meetings have become almost cultish, as analysts and investors alike parse every word of his presentations to glean information about the market. When Berkshire Hathaway announced its cash reserves had grown to a record $137 billion at the end of 2020’s first quarter, this was taken by many as a bearish sign.

So, when Buffett began buying stocks again in 2020’s third quarter, it was taken by some as a sign that it was safe to get back into the market. Some of Berkshire Hathaway’s most notable buying in the third quarter included the following:

  • A $2 billion increase in its Bank of America stake, which is now 12% of the entire company

  • A $720 million investment in hot IPO Snowflake (see below)

  • New stakes in five Japanese companies totaling $6.5 billion

Snowflake IPO

Snowflake is a software company that provides an analytic data warehouse designed specifically for the cloud. While that explanation might not mean a lot to the average American, it translated to a hotly anticipated IPO for Snowflake in 2020. Snowflake’s IPO pricing of $120 per share in September, 2020 assigned a market value of $33.2 billion to the company, making it the initial public offering of all time for a software company.

While the company was expected to be in demand, its initial pricing was only the beginning. By the end of its first day of trading, Snowflake closed at $253.93 per share, nearly 112% above its record-high initial pricing. Just over two months later, on November 27, 2020, Snowflake shares closed at $328.79, nearly tripling its IPO price.

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This article originally appeared on The Most Surprising Stock Market Trends of 2020

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