There are a few reasons that might explain the phenomenon, according to Gunjan Banerji in The Wall Street Journal. When the coronavirus plunged the economy into free fall back in March, the Federal Reserve declared it would do whatever it took to stabilize financial markets. With the help of the giant relief package Congress passed in March, the central bank gained the potential to leverage an extraordinary $4.5 trillion in emergency corporate lending. So if the market seems to be recovering faster than the rest of the country, it’s at least in part because of “the government’s policy of giving out free money,” in the words of the investor Leon Cooperman. Even without the Fed’s help, many companies are doing exceedingly well, particularly big technology corporations. Five of those — Microsoft, Apple, Amazon, Alphabet (Google’s parent company) and Facebook — together make up about 20 percent of the S.&P. 500, and they’ve all posted significant gains. Rallying stock prices reflect investor confidence in future profits, too: Even though much of the market is divorced from economic reality right now, people are making bets that the worst of the crisis is over, that a vaccine will soon arrive and that economic activity and employment will quickly return to pre-pandemic levels. In that optimistic spirit, corporate-earnings expectations remain high, and some investors fear missing out on a quicker-than-expected recovery: “If the stock-market bulls end up being right about a speedy recovery and the economy stages a strong rebound, that would leave other investors left behind a potential stock rally, missing out on gains,” Ms. Banerji writes. Could this be ‘a perfect storm of stupid’? Plenty of market watchers are warning that investors are fooling themselves. Linette Lopez at Business Insider is one of them: “At this moment, almost every human being has an innate bias toward finding a coronavirus vaccine or treatment,” she writes. “The market is reflecting the depth of emotion behind that bias in its wild fluctuations whenever there is even the slightest news about a vaccine breakthrough.” What she says makes this “a perfect storm of stupid,” though, is that millions of Americans are also stuck at home. While many of them are suffering economically, others have extra cash on hand that they’re itching to gamble with: According to The Financial Times, some 780,000 people have created new accounts on three of America’s top brokerage platforms since the coronavirus pandemic hit the United States. With this “herd of newbies” charging into the market at a time of extraordinary uncertainty, she says, “people are going to get played.” Markets up, workers down If the stock market is indeed a party, as Mr. Mackintosh says, it’s a party that most Americans cannot meaningfully take part in. Today, as the economy rains hail on them for the fourth month in a row, they stand outside the market’s walls and hear the revelry growing louder from within. It is no doubt a garish spectacle, as Robert Armstrong writes in The Financial Times, but he argues it should not be seen as merely some economic faux pas. Rather, it is evidence of an inherent and structural tension between the owning and working classes. “Observers are shocked by the market’s insouciance not because they misunderstand how markets work but because they see it as a symptom of how society works,” he says. And how society works, he explains, is through a self-reinforcing cycle of inequality: The richest 11 percent of the world population holds more than 80 percent of its wealth. When the stock market rallies, the gains flow overwhelmingly to that wealthiest class, whose savings have to go somewhere. But instead of spurring investment, the wealth rushes into debt markets and drives long-term interest rates down, which makes corporate profits more valuable. Stock prices go up, the rich end up with more wealth still, and the cycle repeats. That is why, Mr. Armstrong says, “Covid-19 has put working- and middle-class people under immense strain, while the asset-owning classes have felt relatively little pain.” So wherever the market heads, as Paul Krugman summed it up in April, keep in mind (again) that the stock market is not the economy: “The market’s resilience does, in fact, make some sense despite the terrible economic news — and by the same token does nothing to make that news less terrible,” he wrote. “Pay no attention to the Dow; keep your eyes on those disappearing jobs.”
Dude do u even know how much Apple revenue is down in Q2 ? Stores were closed and online purchase was almost 60% down . People buying power has gone down . Before every person was able to afford 1100$ iPhone but with unemployment that is not the case . I don’t know why Apple price is going up . Even if people say it’s 5G but who is gonna buy with 10% unemployment in 2020 and 2021
Totally Agreed ..I don’t understand the market .. Apple is once again the biggest company in the US stock market AAPL $1.53 trillion MSFT $1.49 trillion AMZN $1.32 trillion GOOG $1.00 trillion FB $679 billion
Honestly , I also don’t understand NVDA . 20$ to 350$ in 5 years
Amazon - online shopping is up but shopping is controlled . People are careful about what they order . It’s a big tech bubble and it has already exploded . The size of the hole is small so air is slowly and slowly passing out . Another prick , and there will be bloodbath
I don’t invest much but my 401k is all 100 equites and tech stocks ..so better to convert to cash ?
I am not an advisor and I don’t advise
Fed said they will keep rates zero until 2022 and they'll continue to buy treasuries at the tune of 126 billions/month. (Or 600$/month stimulus for all), and before 3pm market was inching up, but now, it's all red.
Then it will cross 30K before November 🤣😆
Print dollars works
True ..check the robin hood subscribers top 10 holdings ..all are bankrupt stocks
How about none of these, and the market will go down (not crash) after second quarter results start rolling out?