(CNN) -- Trade jitters have taken financial markets on a wild ride this year, putting some cracks in the global economy. But stocks still kept hitting record highs.
For 2020, much of that market turbulence is expected to remain — yet stocks could climb even higher.
Here's what investors are thinking about going into 2020:
The trade war
Less than a month is left in the year, and investors are wondering what to focus on next. But the trade war with China remains the central theme. It is unresolved and promises to continue into the new year.
President Donald Trump said last week it could take until after the 2020 election to reach a trade deal with Beijing, in spite of the "phase one" deal the two countries agreed to in October. The preliminary agreement has not yet been signed.
The slowing economy
Another theme bound to keep investors and businesses on their toes in 2020 is the slowing economy.
US economic growth slowed down this year, even though worries about an immediate recession have abated. A slowing economy isn't necessarily a recessionary one, and the US labor market has remained resilient. Following a stronger-than-average economic expansion at the start of the year, GDP growth moderated to an annualized rate of around 2% as the year went on.
Economists expect the American economy's growth rate to slow below 2% next year, according to a November report from the St. Louis Federal Reserve.
The US Federal Reserve cut interest rates three times in 2019 to re-energize the economy. It often takes some time before central bank policy helps the economy improve, and the Fed has made it clear that it is in wait-and-see mode. But a prolonged or worsening slowdown could lead the Fed to act again next year.
The lower interest rates were part of what propelled stocks higher in 2019. A boost from the 2017 Trump tax cuts also helped the market, particularly in the first half 2019. That's why, despite the trade jitters, political drama in Washington including the president's impeachment process, and the economic slowdown, the S&P 500 is up more than 25% and looking at its best year since 2013. The Dow has risen about 20% this year.
"The combo of a dovish Fed and the benefits of fiscal policy have powered the Dow to 28,000. Yes, the economy isn't great, but we are seeing many signs that manufacturing around the globe could be bottoming. Suggesting this slowdown is just that, a slowdown and not a recession like many feared at the start of the year," said Ryan Detrick, senior market strategist for LPL Financial.
The trade war has weighed on global trade and manufacturing this year. With no end to the spat in sight, this strain could continue or at least prevent a full recovery.
America's factory activity has contracted in each of the past four months. The only silver lining is that the US economy is less reliant on manufacturing and mostly driven by consumption, unlike, for example, Germany's economy.
Globally, manufacturing is still contracting in large part because of the continued trade conflict, although the sector contracted at a lower rate in November than earlier in the year. The JPMorgan global manufacturing PMI came in at 49.8 last month, just below the key level of 50 that represents the line between growth and decline.
A global recession
The world economy could dip into a growth recession in 2020, some market participants think, meaning that global GDP growth might fall below its long-term trend of around an annualized rate of 3%.
That doesn't sound like a great foundation for America's economy or its stock market.
US stocks are the least bad investment
But as long as the United States is growing at a faster pace than many of its rivals, US stocks will likely keep looking relatively attractive to investors.
But 2020 will be missing one important ingredient from this year's rally: the benefits of Trump's tax cuts will have tapered off. Instead, they will be replaced with uncertainty surrounding the US presidential election.
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