It has been a notably strong year for U.S. equity markets, and that strength is compelling investors to wonder wether this powerful ascent will translate into a down market in 2020.
However, if statistics over the past 70 years hold true, next year is likely to produce healthy, if not stellar, gains.
Dow Jones Market Data figures going back to 1950 indicate that the Dow Jones Industrial Average tends to climb 75% of the time, with an average return of about 8.9% in the following year, when it finishes the previous year with a return of at least 20%. As of Friday, the Dow DJIA, +0.28% is up 22% in 2019.
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For the S&P 500 and Nasdaq Composite indexes, the gains tend to be even richer than those of their blue-chip counterpart.
The S&P 500 SPX, +0.49% tends to ring up an average annual gain of 11.2% when it finishes the preceding year with an advance of at least 20%, and gains 83% of the time, according to the data team. The S&P 500 boasts an annual gain of 28.5%, with less than two weeks left in the calendar year.
Meanwhile, the Nasdaq COMP, +0.42% returns 14.2% on average, rising about 78% of the time, when it has registered a return of at least 30% in the prior year. The technology-laden index is up 34.5% thus far in 2019.
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To be sure, past results are no indication of future returns, but recent statistics about stock-market performance have been fairly accurate. Notably, one that forecast that the Dow and S&P 500 were guaranteed to rise at least another 5% on average in the next two months based on a statistical trend pegged to strong returns at the end of October for the main benchmarks has held up.
By that measure, the S&P 500 has gained 6.1% since the end of October, the Dow has climbed by about 5.2%, and the Nasdaq has surged 7.63% over the same period, exceeding the 7.48% average return seen by the index when it finishes the 10th month of the year as solidly as it did.
A number of investors already are forecasting a breakout for stocks in the years ahead, despite worries about the duration of the bull-market run and about the stage of the economic cycle and lingering worries about the U.S.-China trade war, even as progress toward a resolution has been reported in recent weeks.
The head of Merrill Lynch Wealth Management, Andy Sieg, on Thursday told CNBC in an interview that the U.S. stock market could rise a further 20% before the bull market terminates.