Uncovering the Future of End-of-Year Equities: What Will 2021 Bring?

As the year draws closer to a close, many are looking ahead to see what the outlook may be for end of the year equities. Despite a volatile period brought on by the pandemic, the indices have been able to maintain much of their gains this year. The markets have also been boosted by large monetary stimulus packages from many countries around the world. What lies ahead for end of the year equities? The general consensus amongst market watchers is that the stock market will likely remain in an overall trending state this year. Market sentiment appears to be positive, with the economic data being better than expected. Additionally, with more signs of a vaccine possibly on the horizon, investors and market participants are keeping a hopeful outlook. There are still some concerns, however. Even with stimulus, corporate earnings forecasts are still down year-over-year. This could put downward pressure on stock prices. Past trends show that stocks typically tend to improve in the last quarter of the year, due to increased optimism. The typical seasonal factors such as the holiday shopping period could provide an additional boost. Companies that have managed to remain buoyant despite the difficult economy could be favored by investors. This could provide an upward pressure on their stock prices. Additionally, companies that benefit from the technological transformation caused by the pandemic could be attractive for investors. The end of the year presents some opportunities, but brings with it some potential risks as well. As mentioned, corporate earnings forecasts could put downward pressure on stocks. Moreover, further lockdowns and restrictions on businesses due to a resurgence of the virus could be a risk factor. It is also possible that political uncertainty could have an effect, particularly closer to the US Presidential elections. Overall, while there are some risks, the outlook for end of year equities appears to be positive, with the stock market likely maintaining its direction. Investors and market participants should remain optimistic while at the same time, stay vigilant of how the situation may change.