We're in a Recession, but Stocks Aren't Down. What Gives?

Earlier this month, the U.S. economy was declared to officially be in a recession. Since we've been grappling with double-digit unemployment since April, the news wasn't shocking.

What is shocking, however, is the apparent disconnect between economic conditions and the stock market's performance. On March 23 -- back when COVID-19 cases were multiplying and Americans were being thrust against their will into a new normal -- the S&P 500 hit rock bottom at 2,237. On June 23, it was at 3,148. And while that's undoubtedly a good thing for investors, it's also hard not to pose the question: What gives?

Though recessions typically lead to lower stock values, the recession we're currently in is unique for a couple of reasons. First, it wasn't actually triggered by unfavorable economic conditions. Quite the contrary; the jobless rate was low before COVID-19 hit, and stocks were trading at a high, with the S&P 500 holding steady above 3,300 for much of February. Rather, it was the pandemic itself and the immediate shutdowns it forced that caused unemployment to skyrocket.

Continue reading

Source Fool.com