Investors: You're Looking at the Stock Market "Rally" All Wrong
Around the world, the coronavirus pandemic has had a huge impact on people's lives. Although only a small portion of the global population has contracted COVID-19, the massive responses to try to slow its spread have caused economic disruptions of a scale not seen in nearly a century. More than 30 million Americans have filed for unemployment benefits just since mid-March, and millions more are likely to do so in the coming weeks and months.
Amid this ugly landscape, many people are completely confused by the rise in the stock market. Between March 23 and April 29, the S&P 500 (SNPINDEX: ^GSPC) soared more than 30%. Some market participants attribute the apparent disconnect to unjustified optimism, with investors discounting the gravity of the coronavirus crisis and its likely long-term impact on the economy and the stock market.
However, it's misleading to look only at the market's rebound without putting it into the context of the plunge that preceded it. Only by looking at the net impact on the stock market can you accurately gauge true investor sentiment and what people expect in the future. What that net impact shows is a lot more nervousness than you'd think from just looking at the recent rally.
Source Fool.com
