The U.S. economy just had its worse performance ever as businesses shut down across the country as well as much travel decline.
The U.S. stock market hit an all-time high Tuesday, staging a stunning turnaround propelled by Big Tech as trillions of dollars in stimulus aid from the Federal Reserve and Congress helped prop up an American economy gripped by recession.
The S&P 500 rose 0.2% to above 3,389, breaking past its previous Feb. 19 high to finish at the highest closing level on record. The Dow Jones industrial average fell roughly 67 points to about 27,777, off 6% from its Feb. 12 peak. The technology-laden Nasdaq Composite rose 0.7% to above 11,210, which had rebounded to records in June and touched another high Tuesday.
The resurgence comes despite a backdrop of historic job losses, bankruptcies and shrinking corporate profits after the economic fallout from the worst global pandemic in a century and one of the sharpest downturns since the Great Depression. The U.S. leads the world in coronavirus cases, recently surpassing 5.4 million, or roughly a quarter of global infections.
Still, investors have shrugged off a string of dismal economic data in recent months and a spike in outbreaks, opting to instead scoop up stocks at bargain prices as optimism grows for an economic recovery with further stimulus and a vaccine. Investors have also gained confidence from a strong housing market, improved consumer spending and better-than-expected second-quarter corporate profits.
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“The new all-time highs will be met with disbelief, but the way people view the economy and the stock market is consistently wrong,” says Michael Antonelli, market strategist at Baird. “In the short run, financial markets don’t trade on good news or bad news. They trade on whether things are getting better or worse.”
There have been signs of improvement in the labor market recently. The number of Americans seeking jobless benefits dropped to 963,000 last week, falling below 1 million for the first time since the shutdown began in the spring, the Labor Department said Thursday. The figures still remain above a peak of 665,000 in March 2009 following the aftermath of the global financial crisis.
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