Why is the stock market rising even though 26M people are out of work?

Even amidst the COVID-19 pandemic, there are many reasons for the stock market’s buoyancy, Nigam Arora writes for MarketWatch, citing incentives in the industry to retirement-account purchases to behavioral biases. Initial U.S. jobless claims for the week hit 4.4 million on Thursday, pushing those unemployed above 26 million and making for an estimated 15% unemployment rate.

Nigam Arora for MarketWatch:

Many investors believe the stock market has gone bonkers, saying it has become totally divorced from the reality on Main Street. I agree that the stock market isn’t reflecting the economy. There are many reasons for it… Start out with the premise that even if unemployment reaches 20%, then 80% of the people are still employed.

A majority of the people who are losing their jobs earn less than average and work in service sectors. They typically do not invest in the stock market, as they generally do not have the resources to invest. People who generally invest in the stock market still have their jobs. They are still contributing to their 401(k)s, which is creating buying.

The benchmark stock market index S&P 500 is concentrated in Microsoft, Apple, Amazon, and Facebook. Investors believe these stocks are safe…

MacDailyNews Take: More reasons why stocks are rising even though 26 million people are out of work in the full article. It’s a disconnect alright, but, as Arora explains, the system is set up for investors to buy stocks and keep them in stocks.

32 Comments

  1. The stock market is future looking, prices are set by incorporating information about the future. So despite all the uncertainty the markets are anticipating improvement.

      1. Markets are up because the FedReserve Bank gave it free money which is totally unearned. It’s a gift to the failed business model which is fundamentally Socialism. MDN is a local instance. The market is OK with handouts for itself but it whines and gets vindictive when it stops food stamps to the family that lives in a tent.

    1. The markets are future looking alright, but I have a feeling you’ve got the idea related to “”the future” wrong. The market is a like a little child that becomes giddy with treats and the govt is handing out LOTS of treats lately and more are on the way. That’s the “future“ the market is seeing.

      With gold showing renewed price vigor, which is NOT a sign of improvement, corporate earnings reports in a hole (exceptions like Netflix and some others coinciding with people not working), unemployment numbers bad and, reportedly to be much worse NEXT qrt, it’s almost impossible to say the market is responding to market/economic future that is verifiably heathy…at least per its relatively short attention span.

  2. The government via the Federal Reserve is putting $4 trillion into the stock market to keep it from crashing during the fake COVID crisis. Of course, the $4 trillion is just as fake as the COVID virus, since we don’t have $4 trillion in the bank and no sane person would lend us $4 trillion, so we just wrote ourselves IOUs, with the brilliance of Lloyd Christmas in Dumb and Dumber. And that is how the market is being kept afloat while nobody is working and the GDP is shrinking and while businesses are dying.

      1. Yes. It’s the same as the “not dead Fred” character in the stage version of Monty Python and the Holy Grail. It’s all those fake deaths and burials of fake bodies due to a fake virus.
        /s (in the extreme)

    1. @ Kent:
      Just follow your president’s advice and inject yourself with disinfectant. That should, at the very least, put an end to your baseless and imbecilic comments.

      1. You don’t see how this works yet? The President reads something in the news, or his briefing, and he asks about it. The media goes nuts calling him an idiot, when it’s really the people that hate him who are showing the greatest amount of rampant idiocy.

        https://www.msn.com/en-us/health/medical/hydrogen-peroxide-a-potential-treatment-for-coronavirus-infection/ar-BB12qktc
        Medical Daily:
        Hydrogen peroxide (H2O2) appears to be another potential treatment for COVID-19. Health experts said the compound could help prevent virus from spreading across the body and from causing damage. Hydrogen peroxide can be found both in stores and the human body. The immune system uses the compound to boost the natural functions of cells and prevent viral infection.

        https://www.livetradingnews.com/surviving-the-coronavirus-disease-how-hydrogen-peroxide-works-172241.html
        Surviving the Coronavirus Disease, How Hydrogen Peroxide Works
        Hydrogen Peroxide Has a Long History of Medical Use

        Hydrogen peroxide (H2O2) consists of a water molecule (H2O) with an extra oxygen atom.
        The oxygen inactivates viral pathogens by breaking down the viral structure

        Additionally, our immune cells produce hydrogen peroxide. This is in part how your immune system kills infected cells. Hydrogen peroxide therapy aids aids immune cells to perform their natural function more effectively.

        H202 is on the shelf at the local grocery or drug store for $1.00 a bottle.

        The Big Q: Can an inexpensive and easy to administer at-home treatment treat the novel coronavirus, SARS-CoV-2?

          1. Of course you should be getting advice from the people you trust. The difficulty here is that traditional medicine, whether from a specialist or not, appears to have nothing to say. They simply don’t know. To keep politicizing all of this is verging on evil. Science does not have all the answers and randomized controlled studies are not the only approach to the human condition. There’s a limit to this blind trust in scientific experts, who are typically narrowly trained and would be the first to admit they don’t have all the answers.

            I get it, that many people despise Trump. Get over it and stop politicizing this crisis. You will be able to vote him out in a short time. In the meantime all the noise is not helping.

        1. Thelonius,

          Did you actually read the articles you cited? The MSN story is based entirely on the livetradingnews story, so you have one source for this miracle cure, not two. The author of that article describes himself as a “polymath” with a specialty in get-rich-quick market strategies and exotic cars.

          He cites an unidentified article in the Journal of Hospital Infections for the proposition that H2O2 can kill viruses. That journal is about preventing hospital infections, oddly enough, and every article I could find in it about H2O2 discusses how effective the stuff is as a disinfectant to kill viruses on surfaces. They would have no reason to print an article on patient treatment.

          The other source for the livetradingnews article is a Dr.Farr, who is reportedly a cardiologist (who would have negligible experience with respiratory infections since he was an intern). His endorsement of H2O2 has the astonishing title “An At-Home Treatment That Can Cure Any Virus, Including Coronavirus.”<\b> That isn’t medical language; it is the come-on for a medicine show. His conclusion is “you will never have to fear a cold or the flu again. You can cure them on your own.”

          Sorry, but I prefer to believe the consensus of pulmonologists and epidemiologists.

        2. Theo, you are correct but with a caveat: Be careful: The the corporation intentionally made the H2O2 in those brown bottles (at 3%) into a mild poison if taken internally otherwise people would depend on this low cost, profitless remedy rather than bying Big Pharma high profit drugs. Use it externally only.

          Use the food grade for internal use. Get it at the health food store. It’s 33% strength so dilute it with distilled water down to 3%. I put 5 drops to 10 drops in a gallon of water. It’s a bacteriacide, germicide, fungicide, sporicide, and virucide. I treat river water with it when camping.

          I do not know about its efficacy against COVID-19. Some sources say .5% strength but did not check out its method of delivery: Aspirated, in liquid, or injected, but the latter only under a doctor’s care.

          The food grade is efficacious externally too. And the Birdman of Alcatraz used it internally to heal his sick birds. So these people here who poo poo your basic premise are mostly wrong.

          I knew some of this already but check this out:
          https://www.google.com/search?hl=en&biw=873&bih=553&sxsrf=ALeKk03xEwxLh-D1GqO4q8Y-9Ng_bAzFmA%3A1587874970858&ei=mgylXoLsM9T9-gTA-pGICg&q=hydrogen+peroxide+covid-19+and+H2O2&oq=hydrogen+peroxide+covid-19+and+H2O2&gs_lcp=ChNtb2JpbGUtZ3dzLXdpei1zZXJwEAMyBQgAEM0CMgUIABDNAjIFCAAQzQIyBQgAEM0COgQIIxAnOgUIIRCgAToECCEQCjoECB4QClDokgRY_OUFYLbxBWgDcAB4AIAB3AGIAeQvkgEGMC40MS4xmAEAoAEB&sclient=mobile-gws-wiz-serp

          Regarding unemployment, the true unemployment rate is double the lied-about 15-20%, so it’s 30-40%.

        3. Lol. Good one. H2o2 of course is a highly toxic oxidizing agent. Applied to lacerations/ skin wounds, unlike soap and water, hydrogen peroxide kills bacteria, and in fact digests healthy tissue. Today there is virtually no role for H2O2 applied to living tissue.

          1. There is no advantage and significant disadvantage to peroxide over mild soap and water. There is no role for peroxide taken internally. It is a chemical blow torch. Don’t ingest a caustic substance b/c the orange clown thinks it’s a good idea, or the “bird man” uses it.

      2. Last week, William Bryant a senior official at the Department of Homeland Security outlined some research his agency had done indicating that the Wuhan Virus was very susceptible to direct sunlight, heat and high humidity, all of which President Trump had mentioned weeks ago to loud media derision and flat out nasty commentary from the left.

        The President then mentioned, in his “think out loud” manner, that perhaps the experts could look into the use of Ultra Violet light inside the body or trying to disinfect the body from the inside by finding some substance that might do that. Note: At no time did President Trump recommend or even suggest, using disinfectants such as Lysol injected into the body. He was describing a concept. He was actually, for all of the folks out there who like to screech “SCIENCE!” at the top of their lungs, executing the very first step in any scientific inquiry — asking the question, “What if?”

        Hello, have you ever heard of chemotherapy, where we poison the patient in hopes that the poison will kill cancer before it kills the patient? Also, one of the available treatments for cancer is Ultraviolet Blood Irradiation Therapy. Ultraviolet light has long been understood to be a disinfectant that destroys nucleic acids and disrupts DNA. The sun’s ultraviolet light is why it’s one of the most effective ways to destroy the COVID-19 virus when it’s on objects or aerosolized. The question is whether that same ultraviolet energy can be used inside the human body.

        But, beyond that, there is actually a medical procedure that uses hydrogen peroxide in an intravenous technique to kill internal bacteria and viruses.

        In IV H2O2 therapy, Hydrogen peroxide is infused into the circulatory system through a vein in the arm. It drips in over a ninety-minute period. Five cc of pharmaceutical-grade, three-percent hydrogen peroxide are put in 500 cc five percent glucose in water as a carrier solution. Two grams of magnesium chloride are added along with a small amount of manganese to prevent vein sclerosis.

        In the blood, it encounters two enzymes: catalase and cytochrome-C. Catalase drives the above reaction to completion immediately. That part of the hydrogen peroxide that binds with cytochrome-C, however, is not allowed to become water and singlet oxygen for a period of forty minutes. After forty minutes of being bound to cytochrome-C this enzyme begins to act like catalase and breaks down the hydrogen peroxide to water and singlet oxygen. By this time, the hydrogen peroxide/cytochrome-C complex has been spread throughout the body. In this way the benefits of hydrogen peroxide are made available to all cells.

        The effect of singlet oxygen in the human body is twofold. It kills, or severely inhibits the growth of, anaerobic organisms (bacteria and viruses that use carbon dioxide for fuel and leave oxygen as a by-product). This action is immediate, on contact with the anaerobic organism. Anaerobic bacteria are pathogens, the organisms which cause disease. All viruses are anaerobic.

        More info: https://www.austinozone.com/therapies/intravenous-hydrogen-peroxide-therapy/

    2. Printing cash without writing IOUs, aka Treasury notes/bonds, would increase the Money Supply, and lead to very high inflation.

      If you could just print money without the supporting tax revenue or borrowing, a country could easily experience hyperinflation, like Venezuela.

      Since none of that has happened, your theory falls flat.

  3. The market is anticipating the removal of a president who says things that the stupidest guy in your high school science class wouldn’t come out with. The most hilarious thing is that most Americans are so ignorant of science they think the president has good ideas. The rest of the industrialized world can see that the American empire is in the “Nero” (another stable genius) phase.

    1. Wait — so injecting yourself with bleach and/or exposing yourself to burning UV rays WON’T stop the spread of COVID-19? Next thing you’re going to tell me is that Melania didn’t marry Donald for his good looks and sharp mind.

      1. One more time for those who only get their propaganda from CNN:

        Last week, William Bryant a senior official at the Department of Homeland Security outlined some research his agency had done indicating that the Wuhan Virus was very susceptible to direct sunlight, heat and high humidity, all of which President Trump had mentioned weeks ago to loud media derision and flat out nasty commentary from the left.

        The President then mentioned, in his “think out loud” manner, that perhaps the experts could look into the use of Ultra Violet light inside the body or trying to disinfect the body from the inside by finding some substance that might do that. Note: At no time did President Trump recommend or even suggest, using disinfectants such as Lysol injected into the body. He was describing a concept. He was actually, for all of the folks out there who like to screech “SCIENCE!” at the top of their lungs, executing the very first step in any scientific inquiry — asking the question, “What if?”

        Hello, have you ever heard of chemotherapy, where we poison the patient in hopes that the poison will kill cancer before it kills the patient? Also, one of the available treatments for cancer is Ultraviolet Blood Irradiation Therapy. Ultraviolet light has long been understood to be a disinfectant that destroys nucleic acids and disrupts DNA. The sun’s ultraviolet light is why it’s one of the most effective ways to destroy the COVID-19 virus when it’s on objects or aerosolized. The question is whether that same ultraviolet energy can be used inside the human body.

        But, beyond that, there is actually a medical procedure that uses hydrogen peroxide in an intravenous technique to kill internal bacteria and viruses.

        In IV H2O2 therapy, Hydrogen peroxide is infused into the circulatory system through a vein in the arm. It drips in over a ninety-minute period. Five cc of pharmaceutical-grade, three-percent hydrogen peroxide are put in 500 cc five percent glucose in water as a carrier solution. Two grams of magnesium chloride are added along with a small amount of manganese to prevent vein sclerosis.

        In the blood, it encounters two enzymes: catalase and cytochrome-C. Catalase drives the above reaction to completion immediately. That part of the hydrogen peroxide that binds with cytochrome-C, however, is not allowed to become water and singlet oxygen for a period of forty minutes. After forty minutes of being bound to cytochrome-C this enzyme begins to act like catalase and breaks down the hydrogen peroxide to water and singlet oxygen. By this time, the hydrogen peroxide/cytochrome-C complex has been spread throughout the body. In this way the benefits of hydrogen peroxide are made available to all cells.

        The effect of singlet oxygen in the human body is twofold. It kills, or severely inhibits the growth of, anaerobic organisms (bacteria and viruses that use carbon dioxide for fuel and leave oxygen as a by-product). This action is immediate, on contact with the anaerobic organism. Anaerobic bacteria are pathogens, the organisms which cause disease. All viruses are anaerobic.

        More info: https://www.austinozone.com/therapies/intravenous-hydrogen-peroxide-therapy/

  4. I have had many friends look at the decline in stocks as an opportunity to jump into the investment game. I think what we see in volume shifts are the sideline investors looking to get a deal on an investment. I also think there are many seniors that already are getting social security, get a stimulus check; and they are investing them.

    1. Worth noting, per the dollar, or the “unit”…the dollar is not being affected negatively. In fact, the dollar is a “harbor” of sorts, that’s being used to hedge against falling equities.

      Per textbook theory, yes, the unit/dollar, should have less value and it may going forward, but it’s shown nothing of the sort during this econ challenge.

  5. The total number of people over 18-65 years old minus the people in prison or the military divided into those who don’t have a job equals the true unemployment rate and it has never been less than 20% ever. (Hint: the government has never counted everyone)

    The Gentry always wins as long as the Molly Maguires fight among themselves.

  6. The stock market has always (yes, always) been divorced from reality. It’s all based upon speculation, hence the old saying in the stock market: “Buy on rumor and sell on facts.”

    I had family members that worked directly for the NYSE years ago. They openly admitted that stock prices were barely based upon reality and almost totally based upon buyer and seller perceptions.

    Why else would Tesla ever have a higher market cap that is more than GM and Ford?

    One might naively believe that the market cap should have some correlation to “book value” of a company. It most certainly does not

    That’s why some of you may recall my repeated statements (especially back in the dark days) that AAPL (the stock) is absolutely not tied directly to what the financial status of Apple (the company) was at that time.

    1. Ford, GM are run by hired hands (MBA, Accountants, and Salesmen), they haven’t cared about their products in decades while Tesla is run by someone that cares.

    1. The best traders/investors in the world operate mostly divorced from emotions. Do you actually think W. Buffet just happened upon billions figuring out the emotions of Wall St, or learning how to intuit emotionally?

      The investor is a lot like a meteorologist. One can anticipate an event because certain circumstances and factors present the likelihood. Neither are fixed systems and variablities introduced can waylay an astute forecast.

      The earnest “students” of investing have records of success that belie a explanation of mere emotion. Are emotions involved in the mix? Absolutely…it’s called Life.

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