Why the stock market continues to rise amidst a recession
LEXINGTON, Ky. (WKYT) - The stock market fell by 34% in less than a month from the middle of February into early March. Just as quick, the stock market saw the fastest 20-day rise in the entire 100-year history of trading. Many have questioned how can the stock market continue to rise while the country and the whole world is dealing with a recession. Independent retirement planning advisor Josh Smith of Strategic Wealth Designers joined the newscast to help make sense of the justified pricing in the stock market.
“Right now there are several factors helping the seemingly inflated market valuations. The Fed continues to pump money into the stock market as they have shown they are willing to do whatever it takes to keep some sense of balance and order in a world with little of either,” Smith says. “They have also promised to keep interest rates suppressed for as long as this pandemic justifies which really helps areas like durables and consumer housing.”
As high schools continue to report cases, universities cancel fall sports and airlines plan for layoffs on October 1st, Smith cautions the worst may still not be over.
“We are living in a cancel culture right now. The positive is that the death rate has dropped significantly as the case rate has risen but we are seeing every day that events, sports, and even outdoor activities like children using playgrounds are getting canceled or roped off and are not allowed to be used,” Smith says. “There comes a point where the stock market and small businesses can longer shrug off operations at 25% or even 50%. Don’t be surprised if a second drop occurs if we don’t pull out of this pattern soon.”
Four companies are quickly working to get a vaccine in mass production to the world but it’s unlikely any will be ready before the end of the year, leaving the stock market with an uneasy bubble feeling for the near future. To learn more about this financial news topic visit https://WKYT.com/MoneyMatters and if you have a financial planning question for Rob, send an email to Info@SWDgroup.com
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