Two things happened on Friday:
- The U.S. unemployment rate jumped to 14.7% and data showed 20.5 million jobs were lost in April.
- The Dow, S&P, and Nasdaq all rose more than 1.5%. The Nasdaq even turned positive for the year.
So...what’s up with the stock market? Here are a few theories:
An effective government response. Early action by the Fed to provide liquidity prevented a financial crisis in the corporate sector. Meanwhile, Congress sent checks to the majority of working Americans and provided $670 billion in forgivable loans to small businesses. Many experts think more relief is needed, but obviously investors are satisfied, so far.
The stock market = lots of Big Tech. Microsoft, Amazon, Alphabet, Apple, and Facebook account for more than 20% of the S&P’s total value. As we noted, those firms are likely to emerge from the crisis relatively unscathed.
Corporate earnings for the last quarter weren’t as bad as feared.
Finally, investors could be wrong, and we’ll look at this story in a month and shake our heads.
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May 11, 2020 at 06:37AM
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Stock Market Rises Along With Historic Unemployment - Morning Brew
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