2020 Market Outlook: What May Tip the Scale?

Trade wars and a global manufacturing decline weighed on economies in 2019, although central bank rate cuts and resilient consumers provided a positive stock market counterbalance. The question heading into 2020 is: What may tip the scale? Will ongoing trade uncertainty and weakened manufacturing hurt job growth, finally dragging down the services and consumer side of the economy? Or will interest rate cuts and a resolution of the trade war spark a fresh round of global economic growth?

Each section in this 2020 Schwab Market Outlook—U.S. Stocks and Economy, Global Stocks and Economy, and Fixed Income—will discuss ways to prepare for potentially changing conditions. Having a financial plan and an appropriately diversified portfolio are two key first steps for weathering any market environment. Note that this is just a one-year outlook, and investors should keep their investing time horizon in mind before reacting to any forecasts.

Key points:

  • The U.S. economy likely will remain split in early 2020, with manufacturing and business investment still struggling amid trade uncertainty, but services activity and consumer spending healthy.
  • A resolution of the U.S.-China trade war could reverse business uncertainty and unleash investment. However, a global recession could occur if the manufacturing slowdown spreads to jobs and consumers.
  • Ten-year Treasury bond yields should move higher in 2020, assuming recession fears continue to decline. Barring a setback on trade, 10-year yields could rise to the 2.25% to 2.5% area.

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Important Disclosures

Forecasts contained herein are for illustrative purposes, may be based upon proprietary research and are developed through analysis of historical public data.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions.

Investing involves risk including loss of principal.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.