Dow up when news is terrible???

[Scallywag]

Last week and yesterday and as of today, the Dow is up. Does this seem odd to anyone? 15 million Americans are out of jobs, GDP contracting, many small businesses are likely finished for good, companies - big and small, old and start-ups alike - are furloughing or outright laying off, but the markets are up.

What am I missing here?

[james.hendrickson]

What you are missing is action by the Federal reserve to prop up the bond and stock markets.

[disneysteve]

The number of new COVID cases seems to be tapering off.
There is more talk about how and when to reopen everything. Multiple states have joined forces to do that in an orderly manner.
Bad earnings are starting to come out but have pretty much already been priced into the market already.
Some earnings aren't going to be quite as brutal as anticipated.
As James said, the Fed is acting very aggressively to moderate things as much as they can.

[rennigade]

Pretty much what DS said. There is light at the end of the tunnel. Is it going to take a while to get back to normal, of course. Baby steps people. Chatter about reopening, its a step in the right direction. Fewer covid cases popping up, again, progress. If each day gets slightly better than before, the market will respond.

[bjl584]

Markets are looking ahead and seeing light at the end of the tunnel.
I wouldn't be surprised if lows are retested in the next couple months.

[Scallywag]

What you are missing is action by the Federal reserve to prop up the bond and stock markets.

My understanding is that the Fed can only support the markets to a limited extent. Right now, hyperinflation is a huge risk - the Feds are just printing money at this point. There is not much production and very few "services" still being offered to the public. Eventually & unfortunately, this significant contraction to the GDP will be too much of a fault line to "prop up" any more.

Even with negative events already acknowledged & seemingly accounted for, at these prices, I don't think investors really understand how bad things actually are. The market seems to have divorced the economy again.

[Jluke]

You’re looking at the market with present day information and events.

the market is looking at things 6 months out (or something like that).

Things can change any moment of course.

[Scallywag]

You’re looking at the market with present day information and events.

the market is looking at things 6 months out (or something like that).

Things can change any moment of course.

I am actually wondering if this is a short squeeze rally, further propelled by the FOMO crowd, as opposed to any market expectations for both this year and next?

[TexasHusker]

there is no way there is anything fundamental to support stocks where they are currently. 20% below their highs? We are going to have NEGATIVE GDP growth for the next couple of quarters, by a substantial amount. The averages at these levels make far less sense than when they were at their highs, if that is possible.

[Scallywag]

there is no way there is anything fundamental to support stocks where they are currently. 20% below their highs? We are going to have NEGATIVE GDP growth for the next couple of quarters, by a substantial amount. The averages at these levels make far less sense than when they were at their highs, if that is possible.

Not negative but close to 0. The only country that - I am aware of - is expected to have a "growth" rate at 0% is India, down from the previous figure of 1.4% "growth". If you thought Americans had it bad, 1.2 billion Indians have been totally and unilaterally SCREWED!

This is highly likely a short squeeze + FOMO rally.

[disneysteve]

Not negative but close to 0.

I agree with TH that it will be negative. That's what defines a recession - two consecutive quarters of negative growth.

[LivingAlmostLarge]

Um I think they are underestimating earnings, job loss, unemployment, and people falling behind their bills. But instead the market because of their privilege is only looking at "oh the covid is under control". It's not so bad. There all these people on unemployement will get back to work. I think we were in a recession before covid and now we're in a longer one. I think a lot of traders are underestimating. They keep underestimating the unemployment numbers. They underestimated the job loss. Really? Is it that hard to believe?

When you live a cushy life, desk job, work from home, and you are still employed you think that the economy will open back up and everything will be fine. I wonder if they realize the impact it had financially on many people who were likely NOT making money from the Dow Jones hitting 30k in Feb 2020. That these same people not cruising along in the economy before covid certainly aren't now.

I don't think traders have a clue. I have a lot of people I live by who haven't a clue. To them life is going on and they are just dying at home, still letting cleaners come in to clean. Still going out. Going on their boats. Doing all take out. Not really changing. There is no hardship. I honestly question if they realize how on edge the economy is?

Of course they inherited a ton of money, parents always had money, they likely don't save a penny. But heck why should it matter? I mean if you inherit a ton from your parents what is there to worry about?

[Scallywag]

Um I think they are underestimating earnings, job loss, unemployment, and people falling behind their bills. But instead the market because of their privilege is only looking at "oh the covid is under control". It's not so bad. There all these people on unemployement will get back to work. I think we were in a recession before covid and now we're in a longer one. I think a lot of traders are underestimating. They keep underestimating the unemployment numbers. They underestimated the job loss. Really? Is it that hard to believe?

When you live a cushy life, desk job, work from home, and you are still employed you think that the economy will open back up and everything will be fine. I wonder if they realize the impact it had financially on many people who were likely NOT making money from the Dow Jones hitting 30k in Feb 2020. That these same people not cruising along in the economy before covid certainly aren't now.

I don't think traders have a clue. I have a lot of people I live by who haven't a clue. To them life is going on and they are just dying at home, still letting cleaners come in to clean. Still going out. Going on their boats. Doing all take out. Not really changing. There is no hardship. I honestly question if they realize how on edge the economy is?

Of course they inherited a ton of money, parents always had money, they likely don't save a penny. But heck why should it matter? I mean if you inherit a ton from your parents what is there to worry about?

My parents have / had plenty of money. They came from poverty and built a real estate portfolio worth millions. They never invested in the stock market because they did not understand it at all and called it a "casino". The difference between the people you mention and me is that I am not close to my parents & have limited contact with them. They likely won't leave me an inheritance (they feel justified in doing this as they disagree with some of my life "choices") and I am fine with that.

In all honesty, though, I don't think it is just the rich / comfortably off ones that are seriously underestimating how bad this is. I think it is even small-time Mom and Pop investors who see how the market is doing well when everything else is collapsing, and are jumping in to make some quick money - treating the market exactly like it were a casino, as my parents call it.

I don't tnink this will end well. A much bigger crash is coming. Unless you're investing for the long haul, I can't see how CMG would gain $200 / share in less than 3 weeks given how the restaurant industry has taken a beating or how BKNG can shoot up $350 / share when all non-essential travel has halted (pun unintended) & unlikely to go back to pre-pandemic levels until mid-2021. This is mania and a crash is, unfortunately, almost certainly coming.

[disneysteve]

Unless you're investing for the long haul, I can't see how CMG would gain $200 / share in less than 3 weeks given how the restaurant industry has taken a beating or how BKNG can shoot up $350 / share when all non-essential travel has halted (pun unintended) & unlikely to go back to pre-pandemic levels until mid-2021.

It's hard to say. It looks like BKNG, for example, is still down about $600 from a couple of months ago. So at what point is the stock fairly priced for current conditions?

[LivingAlmostLarge]

I sort agree with scallywag. I can't believe how much stocks have rebounded. I don't get how tesla was $361 to now $709. Seems like quite a ride in less than a month. That's not the only stock. I don't get how you can have earnings miss and cut forecasts and still have stocks go up. But I guess I'm way off that our economy is going to rebound in a V. No recession on the horizon. We aren't there and won't be there.