I was responding specifically to this comment that says "look at the Dow Jones instead of the S&P" to make a point that it's the same issue. I agree with parent overall in that I'm surprised the market is holding up as well as it is.
It isn’t criticism. The comment is unsourced speculation. The stock market moves up and down all the time, so there are tons of other explanations for what happened yesterday and there was no effort to rule them out
Counter point: beginning of 2021, for weeks I was wondering why the markets were not reacting to Covid.
Only when travel restrictions were introduced, and only when they were introduced to the US, the market started taking notice.
Does the market extrapolate future earnings and macro economic trends, sure. Do some people have secrete insights beyond that? Sure. But I'd say the market as a whole is pretty stupid and reactive.
There is a pretty big disparity between these numbers and the optimism in the stock market. The S&P indexes are only down about 14% right now since February and were priced based fairly optimistic growth assumptions at that time.
The best argument I've seen is that the stock market typically prices things in faster than other parts of the economy, so the stock market took the hit well before things like unemployment indicators did.
Also, some stocks are doing alright, while others are doing badly, depending on what sector they're in. Looking at the aggregate gives misleading information.
Markets aren't ok. "What’s really going on is something akin to an evenly matched tug of war that fails to move the ribbon tied around the center of the rope, giving the impression of harmony while powerful forces do silent battle until someone slips." [1]
It's absolutely staggering that this article and commenters here have failed to pick up on the fact that the markets are bearish at the moment and that this is a post election market too.
First of all, you are ignoring the fact that the Dow dropped ~37% earlier in the year in response to what was happening. The market has never dropped that much so fast.
Second, a great day means nothing if you look at how volatile the market has been lately. We are seeing large swings up and down on a regular basis.
Third, there is no indication that tens of millions unemployed (which we are still figuring out how much of that is actually temporary vs. permanent) would necessarily immediately affect the large cap stocks in the Dow. These are companies like 3M, Apple, Caterpillar, etc...
Lastly, just because the Dow is up significantly on a single day does not mean all the stocks in the Dow are doing great. We've been seeing handfuls of stocks carry indices upwards even though they also contain poor performers.
I'm more concerned about the housing market than the stock market.
The drop in inflated securities prices seems like its just the business cycle doing its thing. Take a look at the Wall St. Cheat Sheet. We're still at the Denial / Panic phase, but we'll get to the Anger / Depression phase in time.
Its a bit surprising to me there hasn't been _more_ tumult, given all that has been happening in the world the past few years.
I'm neutral on the market right now, I don't think it's entirely unfairly priced. NASDAQ is in the best shape of the indices because tech companies don't seem hugely affected by all this insanity. Most major investment banks are expecting a huge boom in Q4/Q1 and return to business as usual. COVID new cases are trending downwards across all major economies (except the US, to follow soon) [1]
I'm actually feeling better now than I was in October 2018. Rates are lower, tons of financial stimulus, a waning problem and a warming stock market.
It's morning here, I'm sitting at the desk, drinking coffee and I can assure you I'm OK mentally :) Also I can assure you that short facts in my comment ARE strongly related to current state of the market.
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