When there's so much stupid money being pumped into the system, why would the fundamentals, like unemployment, lack of consumer demand, gdp contraction, expected dividends, etc, etc, matter?
We could all be out of work, trading bottlecaps for packets of ramen for the next year, but as long as the fed keeps printing a million dollars for every 3 unemployment claims, the markets will be soaring.
(I should point out that because the USD is a world reserve currency, and has very large amounts of it in circulation, this won't even result in hyperinflation.)
Spot price does nothing to measure uncertainty. Volatility is still very high which means, by definition, we are in an uncertain market.
A much better explanation for the dow rising is the opposite of what you propose: we don't really know how this will impact things so it's very hard to price all of this in. Investors already known that unemployment claims this week would be awful so that information is already priced in, but we're still really waiting on information about how all of these impacts will impact businesses as a whole.
I mean, one very straightforward interpretation of the headline of this linked article is that Yelp will be seeing a 30-40% shortfall in revenue for the medium term future (i.e. long enough to make the firing and hiring process worthwhile). At its worst, the market was guessing at a 38% drop in valuation, and it's now recovered significantly from that.
My guess, and no I'm not buying puts to test it, is that we're going to see another series of shocks to the market when the revenue numbers start being reported and the big employers start running out of money and shutting things down.
Right now the immediate job losses are all in the service sector and small employers, and those jobs are basically invisible to your typical trader bro.
I think Q1 numbers will start to shake people out of their optimism. We'll see.
Most of this activity is driven by robotic trades by institutional investors. It's largely quantitative. Whether the quantitative priors are accurate, is debatable.
I'm not in the industry, but I have to believe the quants are doing what all of us are: they're throwing out the models, rewriting stuff where possible, but basically just guessing like the rest of us. And that process is a victim of their own subjectivity. And this is not just a demographic well-positioned to have a good, objective understanding of epidemiology.
Basically that's just a long winded way to say: wall street isn't looking at this correctly and is going to be surprised when quarterly results don't show the recovery they're expecting.
That's not necessarily true. First of all, 30% unemployment, while a big scary unprecedented number, represents the expected outcome of the official policy of all governments (Federal & State) , which is forced unemployment. The CARES stimulus includes a $600/week unemployment insurance _on top of_ the existing state UI. In every state, the unemployment benefit is actually higher than the median wage [1]. Businesses know this, and proactively lay off / furlough their employees so that they may collect this benefit, with the intention of having them be first-in-line for re-hiring once this all passes. The other half of the CARES stimulus includes forgivable loans to businesses with the hope that those loans can keep businesses afloat so that they may be in a position to re-hire once this all passes. Put simply, because half the stimulus is in the form of direct insurance payments to people, and unemployment is the means of receiving that, you will see high unemployment numbers. Not only is this expected, it is intended.
All this being said, it's still not certain that many of these businesses will be able to survive even with the loans/stimulus, nobody knows for sure. The market doesn't price in the scary 30% unemployment number, it prices in the expectation that this number will fall back to usual levels by next year.
The grandparent comment asked why the Dow increased today, and it's because the Fed announced $2.3T in new small-business loans, which slightly increases the percentage of businesses that may be able to weather this storm.
I don't think anyone really understands how bad things are, and the only reason fears have abated is because everyone is operating under the assumption that the country will "open back up" later this month or next month, and things will largely go back to normal in the summer. Once that sentiment erodes and reality sinks in, we can expect the stock market to sink with it.
Now that uncertainty is going down as we understand it all better, have more data, have plans in place, the economy is recovering to a more accurate, "this is actually what this whole ordeal will cost us"