The market doesn't reflect the health of your local businesses. It's largely chains and massive corporations that are publicly traded. Between the fed's $1.5T injection in the markets and the $500B bailout/loans for corporations, you can see how the numbers might not look too bad from Wall St's disconnected perspective. Today a lot of companies were announcing their numbers and matched ~ expected earnings. Q1 wasn't 100% trashed by Covid. Q2 might be a lot more interesting especially if the shelter in place lingers towards the end of the summer which would not surprise me. The modern American society has put a ridiculously disproportionate value on capital vs individual which is driving the dissonant signal from the stock market. People could be dying of hunger, but if the SP500 companies kept their numbers in line with expectation, the "stock market" would be green all over...

Kind of a tl:dr, the market is ahuman and possibly anti-human.

And yet, as a human, that's probably where you should put your retirement savings.

How it was explained to me is that the markets don't always reflect the economy because the negative outcomes have already been priced in. So, if the markets were expecting a downturn in the economy of -20%, but the economy actually went down -15%, then the market might go up, even though the economy is still doing worse.

Another possible explanation is that we're currently print a lot of money without producing much stuff. So, inflation should be happening, right? But people can't really consume any goods or services. And so it's the prices of investments that gets inflated. (this explanation is a bit more iffy to me though than the first)

My feeling is that investors have steadier hands now after they've witnessed the 10+ year rally after the 2008 crash. No one wants to be left out. Eventually though the market will catch up with what's happening on the streets (unless the fed keeps pumping money in).

The DOW dropped almost 13% on March 16th. That's the biggest single day drop since 1987. How is that evidence of investors having steady hands? Multiple market volatility trading circuit breakers have been tripped since the crisis started. How is that evidence of investors having steady hands? All I see is an extremely complex system with the ability to be reactionary, irrational, and volatile.

Single day drops are anecdotal. Overall drops in S&P500 are much lower, so far, then they were during the 2008 crisis. I’m saying “so far” because eventually the stock market will catch up to what’s happening outside. It’s just that in 2008 economic activity did not come to a halt like now and yet the stock market saw a larger impact.

I think that the sentiment today is that governments and central banks will not allow the market to collapse for as long as they can (a point which no one can really point at).

You will get 100 different answers. I like the argument that inflation is actually high, but our outsourcing of goods that make up the consumer inflation algorithm to cheaper countries makes it seem like inflation is low, but goods that can't be outsourced (education, housing, startup unicorns, financial assets like stocks) were eating the excess inflation that had no other place to go.

So the real value of stocks is lower when adjusted for true inflation, but everyone claims inflation is minuscule / nonexistent so we can pretend that printing trillions of dollars and handing it to banks is having no effect.

I'm no expert, but this is the explanation I heard, and it makes sense to me:

You're judging the market by looking at the indexes. The DOW is 30 large companies. The S&P 500 and Russel 3000 are weighted proportionally to how large the companies are. Even the "small" companies in these indexes are larger than your local restaurants or misc goods / services businesses. The majority (maybe all) of these large companies will easily survive, and many of them are going to scoop up all the customers from the mom and pop shops that will fail because they don't have an aisle of "essential" goods to legally remain open.

Now, if you're retired and need to live on your savings for the rest of your life, where would you put your money? All the people who think the forced shutdowns hurt the wealthy really don't get it.

The simplest explanation is that the stock market is a marketplace of buyers and sellers. There was a big selloff in March, then we ran out of people willing to sell. How do you price, say, Google? Or Nike? Or anything? There is too much disagreement on how things should be priced for any shares to change hands until we have more information.

I think we won't see a true adjustment until earnings reports come in from a "full covid" quarter. At that point, unless PE ratios skyrocket, prices simply have to come down.

If you know better than the market you should buy some puts!

This always seems a bit circular to me? If you participate, then you are in the market, and you become part of its efficiency. Ergo, you are correct.

Sounds like a sure thing!

It's expected that there is some pullback after that first leg down. Expect a second. Right now we are practically mirroring the chart from 2008, if you want to see where we are at.

> why are the markets steady and rebounding when the actual state of the US economy is so dire?

Because everything anyone involved in the markets has ever told you is a complete lie.

Maybe so, but please don't post unsubstantive comments here.

What, exactly, was unsubstantive about that comment? I'm flabbergasted that after what the market has done in the last couple of months, especially given the OP, that anyone is under the impression investors have any idea what they're doing.

Please, everyone tell me some more about it all being "priced in."

Not to speak for dang, but such a broad and potentially inflammatory assertion typically warrants references or at least some elaboration on how you came to that position

Including people on HN. /s