: Despite coronavirusâ€™ economic toll, why did the Wall Street just see its best month in 33 years? #IndiaNEWS At times the contrast between the real economy and the stock market is striking. For United

Despite coronavirusâ€™ economic toll, why did the Wall Street just see its best month in 33 years? #IndiaNEWS
At times the contrast between the real economy and the stock market is striking. For United States stocks, April was their best month since 1987, while at the same time real economic indicators â€“ such as employment, manufacturing, services, trade, commodities and GDP â€“ tanked. It seems that in April, the stock market caught the tail end of spring break spirit.Some suggest this shows investor sentiment is free of any anchor in the real economy. Either this or rampant speculative flows â€œbuying the bottomâ€? have become a self-fulfilling force. I argue that market sentiment in April was informed by twin-howitzer policy deployments of overriding force and clarity, but which are ultimately of finite holding power.During economic contractions, stock prices generally react negatively to unanticipated increases in unemployment. Research shows that a rise in unemployment portends reduced earnings and dividend growth for companies. This relationship is especially strong during economic contractions. So when unemployment increases unexpectedly, stock prices fall â€“ usually.Yet the big step-change increase in initial jobless claims in the week ending March 21 coincided with an extraordinary sequence of dramatic response measures by the US central bank, the Federal Reserve. The stock marketâ€™s bounce began on the following Monday and continued throughout April, despite mounting unemployment-insurance claims, which...Read more

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