U.S. stocks come close, but fall short of record high

[Omaha Steve]

Source: Washington Post

The S&P 500?s resurgence defies reality: an entrenched recession, double-digit unemployment and a pandemic with no end in sight

By Hamza Shaban

U.S. stocks came close to making financial history Thursday, soaring toward record highs before slipping in late day-trading.

The Standard & Poor’s 500 index has been on a remarkable turnaround since late March, when equities markets got hammered by the economic calamity of the coronavirus.

The benchmark index — which offers a broader measure of the stock market than the Dow Jones industrial average — has been flirting with its February record of 3,386.15 for several trading days. It briefly topped that level Thursday before falling back.

The ferocity of the rebound has been underpinned by massive financial support from the federal government, said Nicole Tanenbaum of Chequers Financial Management, allowing investors to look towards an eventual recovery. “Economic data, while still at dire levels, is starting to show signs of stabilization, which, combined with a better than expected earnings season, is further fueling investor optimism despite an incredibly uncertain backdrop,” she said.



The Charging Bull statue stands near the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, June 17, 2020. U.S. stocks fluctuated as the recent rally begins to show signs of losing momentum amid a worrying increase in coronavirus cases. Photographer: Michael Nagle/Bloomberg (Michael Nagle/Bloomberg)

Read more: https://www.washingtonpost.com/business/2020/08/13/stocks-record-bear-market/

[Thomas Hurt]

1. Its cool, only the middle class and poor are getting f**ked by CV19 the rich are doing fine. (snark)

[Frustratedlady]

2. I don't understand how this all works, but is the Fed. feeding the stock market?

Some other entity? I don't understand how the market stays up with a situation like we presently have.

[SunSeeker]

5. Yes, the Fed has been feeding the stock market $2.3 Trillion since April.

With plans to inject up to a total of $5 Trillion.

https://markets.businessinsider.com/news/stocks/why-stock-market-soaring-amid-recession-signals-fed-coronavirus-stimulus-2020-4-1029104715




But $20 billion to keep to our post office running? "No way!" says the GOP.

[PatSeg]

8. Or a coronavirus relief bill

to help average people, schools, state and local governments. Trillions of dollars to help the wealthy, no problem.

[Frustratedlady]

9. So, they have money for that, but not to put back in play with the little people who will spend it

back into circulation?

What is the going return on putting money into circulation? I seem to remember it used to be 1.7 return.

[SunSeeker]

11. Yup. Food stamps (SNAP) is a spectacular return on investment.

Every SNAP dollar spent generates $1.73 in real GDP increase. "Expanding food stamps," the study read, "is the most effective way to prime the economy's pump." https://www.theatlantic.com/health/archive/2012/07/the-economic-case-for-food-stamps/260015/

[Frustratedlady]

12. So why aren't they dispensing food stamps again rather than have long food lines?

I always thought food stamps helped the farmers, as well as the grocery stores and kept the poor fed. Yeah, I know about Cadillacs and fur coats.

This whole thing doesn't make any sense. Do Republicans even understand the return at least has some value?

I'm afraid they are going to mess around long enough that we get into a real depression/evictions and the dollar bill will only have value as fuel, like my mother told me they did with corn during the Depression since it was only worth 5 cents/bushel.

[not fooled]

18. Because radical extremist "libertarian" billionaires

who want no assistance for anyone except the rich want to kill off food stamps. Purely to suit their twisted ideology. Unfortunately, they are running the government now courtesy of their puppet red don.

[Bengus81]

10. Yep....this quote about says it all............

"The Fed announced a $2.3 trillion package on April 9 to bolster lending and begin buying corporate debt across a range of credit ratings."

$600 per week for those effected by CV19? HELL NO!!!!

[Born Free]

13. Wait to see what happens for the next president

You will see drastic changes, FED will say they need to cut back need to conserve yada.yada,yada

[progree]

14. Personal income was up 7.3% in the 2nd quarter, and up 10.1% over Q2 2019

Last edited Thu Aug 13, 2020, 08:04 PM - Edit history (1)

far in excess of inflation and population growth. A very substantial real increase.

Details of the graph's and numbers' sources are in post#9 in another Econ Group thread





Plus interest rate cut to zero (makes bonds even less competitive with stocks), virtually unlimited lending to corporations, M2 money supply up 25%, asset purchases by the Fed, Q3, deficit-tripling spending.

Result: market back up.

Despite a nose-dive in earnings:

Q1 S&P 500 Earnings per share:
2017 Q1: 27.46,
2018 Q1: 33.02,
2019 Q1: 35.02,
2020 Q1: 11.88 👀 😲
https://ycharts.com/indicators/sp_500_eps

We don't have the full Q2 earnings yet. But likely to be a lot worse, given that Q1 GDP declined by 5%, and Q2 GDP declined by 32.9% (both on an annualized rate basis. The actual GDP drops were Q1: 1.3%, Q2: 9.5%). So it would be pretty much impossible for Q2 earnings to be anything but a lot worse than Q1 earnings.

[Frustratedlady]

17. Thank you for all that info.

I'll try to figure it all out.

[progree]

19. You're welcome. Basically a ton of (unsustainable) stimulus spending in many forms

has been propping up the stock market. (Before the stimulus began, the market dropped 34%).

The problem is that it can't be kept up forever, and when the inevitable unwinding of the stimulus begins, the market will react like this:

Picture Wiley E. Coyote running off the edge of the cliff, noticing that suddenly there's no feeling under his left foot, likewise his right foot, then he looks down, and then:

M a g a a a a a a a a    a    a    a        a        a            a               a                                      a

[EarthFirst]

3. Congress skips town on the working class & Wall Street has a party... nt

[Wellstone ruled]

4. Just have to understand,

this market is like a balloon,hollow on the inside and supported by the ten FANGE stocks.

[Bernardo de La Paz]

6. They went up yesterday, the day after Harris was announced. So the market is not phased by her

The market has already priced in a Biden victory.

[Mr.Bill]

7. The Dow Jones was in the red all day. n/t

[gab13by13]

15. Don't forget Chairman Powell's last report

where he said that central banks were ready to pump more money into Wall Street if needed.

I use this example for why the market is up. Take a homeless person living under a bridge and give him 2 million dollars and then ask him how he is doing economically?

It looks to me like the demand side of economics is not consequential any more. When farmers lost their markets Trump simply gave them billions of dollars.

[bucolic_frolic]

16. Volatility and Trillions

Twice the money chasing 1/2 the economy. I'm guessing we may have already made a top, or will by mid-October. The tech economy and 7 FAANGs plus Tesla are fine. Find the income streams for the rest of the economy to support them long term.

Cash flows. It's all about what they produce over the decades.

[jayfish]

20. I Feel As If...

the entire US is a "bubble" and we're going to pop any minute. It's all BS!

[Bengus81]

21. Hell everyone in 1929 just KNEW they couldn't lose buying shares on margin

Yep...they couldn't lose.

[tclambert]

22. Yet companies are bleeding money and declaring bankruptcy like crazy.

Steinmart, JCPenney, Lord and Taylor, Men's Wearhouse, Chuck E. Cheese, Gold's Gym, 24 Hour Fitness, Intelsat, Ultra Petroleum, Whiting Petroleum, Chesapeake Energy, Virgin Australia, Aeromexico, Hertz, Advantage Rent A Car, Art Van Furniture, Borden Dairy, Briggs & Stratton, Cirque du Soleil, and more.

[Steelrolled]

23. The big tech companies have a big impact on the stock market

and they are doing just fine.

The stock market looks out to the future, and once the initial panic of COVID-19 ended, it headed towards its previous path. The market believes that in a reasonably short time (< year) COVID-19 will not be a major factor in the economy. And you can't wait for that to happen to get back in. The other factor is that bond yields are near 0.