The First Week of 2020: How U.S. Markets Started the New Year

January 2, 2020

The 2010s experienced the longest U.S. bull market ever and was also the first 10-year stretch in nearly 170 years that didn’t experience a U.S. recession. U.S. stocks closed out 2019 with a 190 percent gain, and according to The New York Times, in 2019, you “couldn’t lose money in the market if you tried.”

So, how did the first week of 2020 fare in comparison? Are we heading for another historic year or is there change in the air? Here are the big market-moving headlines of the week.

The New York Times kicked off the year letting readers know 2020 probably won’t be the record-breaking year that was 2019. In the article, The New York Times explained that investors aren’t expecting a recession but rather, “it is a simple matter of math. Stocks and bonds do not have as much room to rise after the stellar success they had in 2019, analysts say.”

Meanwhile, CNBC warned that earnings don’t look promising — which could put a drag on the market. Many companies who ended the fourth quarter with 2019 will report earnings in the coming weeks, offering more clarity.

On January 3, news that Iranian commander General Qasem Soleimani had been killed overnight in Baghdad drove more uncertainty into the market. The Dow dropped more than 200 points while the S&P 500 decreased by almost 1 percent. Alternatively, nearly all of Cboe’s volatility indexes rose throughout Friday, as investors reevaluated risk.

Following the weekend, rising geopolitical tensions and talk of a U.S.-Iran war stressed the markets before they rallied again. Reacting to the same news, the dollar strengthened against the yen.

The Wall Street Journal explained why more investors are ready to take more risk to stock-options. As stock options gain popularity, we’ll be curious to see how index options perform after a year of growth in 2019. Cboe’s Select Sector Index Options were all on the rise in 2019. By the end of 2019, the consumer discretionary sector led the pack, followed closely by the technology sector and the healthcare sector. We’ll see if these trends continue amid growing concerns and trade tensions.

After such an eventful start to the year, 2020 could shape up to be another one for the books.

Follow Cboe on Twitter for more updates on what’s #WorthWatching in 2020.