Re:Why is the stock market rallying when the economy is so bad?
by matthewdgreen on Monday May 11, 2020 @08:17AM
(#23141279)
If we assume that the market is rationally pricing future revenues (and I don’t personally assume that at all right now) then you have to look at early March as a prediction that things were about to get extremely terrible in a hurry. As a macroeconomic prediction, that seems like it’s actually a pretty good prediction —- based on where things are in the real economy. But the stock market has since decided that the actual outlook is about the same now as it was in October 2019 on the tail of a record expansion with 3.6% unemployment. That doesn’t seem so reasonable anymore.
Regardless, the factors you mention are only two of the many factors that affects the value of stocks. The reason that causes a crash isn't necessarily the inverse of the reason it may go back up.
Poor management of the pandemic isn't necessarily a reason for stocks to drop, either. The market doesn't care about public health any more than it affects profits.