The stock market just hit its first record since the pandemic started

(CNN Business)The S&P 500 (SPX) closed at an all-time high on Tuesday for the first time since the Covid-19 pandemic hit the United States.

The index, which is the broadest measure of Wall Street, had been hovering in record territory for days but repeatedly fell short of reaching the milestone. But Tuesday was finally the day. It close up 0.2%, the first record since February 19.

The record is a big deal, because it means it only took Wall Street five months to go from the most recent trough — after the pandemic selloff in March — to a new peak. This would make the Covid bear market the shortest in history, at just 1.1 months, said S&P Dow Jones Indices’ Howard Silverblatt. Stocks fell into a bear market during the spring selloff.

“It’s hard to believe, but the 2020 bear market is officially over,” wrote UBS Global Wealth Management’s Americas CIO Solita Marcelli in a note to clients.

The market climbed higher on a combination of unprecedented fiscal and monetary stimulus in response to the pandemic, as well as hopes for a swift economic rebound.

“This is bittersweet news for some investors, who had hoped for another opportunity to buy more stocks on another market decline. On the bright side, this new bull market still offers opportunities for investors,” Marcelli said.

Although large-cap US stocks have been climbing higher over the summer, smaller American companies, as well as international stocks have more room to run.

By other definitions, a new bull market is only achieved after a 20% rally that doesn’t get undercut within six months. This would be the case next month unless the market witnesses a dramatic selloff.

“Many continue to wonder why stocks are at new highs with 10% unemployment and nearly a million people filing for initial unemployment claims. The truth is economic data is backward looking and stocks are looking ahead to a much brighter future,” said Ryan Detrick, Chief Investment Strategist for LPL Financial in emailed comments.

The Nasdaq Composite (COMP) also finished at a record high on Tuesday, up 0.7%, although it only had to exceed Monday’s peak to accomplish that.

The Dow (INDU) was the odd index out, closing the day lower, dragged down by losses in the energy and financial sectors. It ended down 0.2%, or 67 points. The index remains 6% below its peak.

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8 Comments

  • eeeeeeeeeeeeeeeeeeeeeeeeee

    Although it can only be considered good news to have the stock market hit a high, the rate of unemployment in this country is still baffling. It is mentioned in the article that economic data looks backwards while the stocks look forward to a better future. Here there is some confusion as to whether the future will really be better if there are still millions of people unemployed. Covid has ruined the lives of many and did set back the economy, at least for a little while. This rebound is certainly impressive and may bring more prosperity to the nation, but to the average person, probably their most important concern about money is whether they have enough of it to survive. The stock market probably doesn’t have much importance to the average person even if they have stocks in it because that money isn’t very tangible, it’s harder to use the money from stocks to pay for food or rent. On the other hand, a job provides enough money to deal with those things more in the moment. It’s not as complicated as money in the stock market is. Therefore there should be less of a focus on the stock market and more on getting the unemployed employed or just providing them with the essentials for survival.

    • 8:46 am - August 19, 2020

  • suissquad

    The stock market is not a very reliable source when thinking about the health of the economy–with a tenth of the country still unemployed and businesses still struggling to get back off the ground, celebrating with the S&P’s slight improvement is not a wise move. I would like to believe that reasons for this high in the market is due to hopes for an early vaccine, large corporations such as Apple and Amazon having a good streak, the need to invest in stocks after the Federal Reserve announced that they would be printing more cash (lowering its value), and perhaps even Biden’s confirmation as the Democratic Party’s nominee for president last night. Even before this pandemic, with the stock market climbing ever higher, normal people were still living paycheck to paycheck and not being in a better economic position than the market should have accounted them to be. However, I still hope that this improvement in stocks is not a fluke, a little spike before we fall once again into the “bear market” that the article described. How effective is the stock market anyway for describing the economic situation of Americans across the country.

    • 3:11 pm - August 19, 2020

  • nycvibes75

    So often the stock market is looked at to tell us about the state of the U.S. economy, but given how high the unemployment rate is, I think it is safe to say it is not very telling. This pandemic has taken a huge toll on people’s lives, whether it be sickness or lack of financial stability. This stock market record just goes to show that we have a long way to go as far as the economy goes. Yes, it is an excellent thing that the stock market continues to climb, but you can turn your head to look at the 10% unemployment rate. Although, the author does mention that the stock market is really looking to the future, and all we can really hope for right now is a brighter future. Given that our economy is responsible for so many lives, it is imperative that the country improves from here.

    • 11:02 pm - August 19, 2020

  • nerdalert

    This article shows that the current economic state is sort of contradictory. In reality, unemployment is at a relatively high rate and many people are facing an uncertain future in their chosen career. Small businesses are still struggling with their revenue. Despite the reality of the situation, the stock market is looking up. This is good in terms of international economics, but not quite as reliable as it has been in the past. We can hope for a good future, but the world in a few months could be completely different from the one we are living in now. The cornerstones of our economy are rapidly changing and the government is having to become increasingly more involved in daily economics. Overall, the boom in the stock market is a good sign for the country, but we can’t put too much faith in it.

    • 8:43 am - August 20, 2020

  • purple lime

    I think the fact that the stock market is doing well is due to the fact that people are simply tired of this pandemic. People simply aren’t as afraid of the virus as they were in the beginning and are looking to go back to normal. This is evident in state’s such as Florida where there are very little guidelines for public health and quarantine is no longer enforced. This has resulted in an uptick in coronavirus cases, but again people have stopped caring. As economic activity begins again, the stocks are increasing as well. In the future we shall see who’s right. Is the coronavirus simply not as big of a deal as we thought and it’s time to restart the economy, or is the economy going to crash again as many become ill and fear is reinstated.

    • 1:18 pm - August 20, 2020

  • 112358

    While the stock market going up in these times may sound like a sign that the US is triumphing through the pandemic, however, I think it shows that even amidst the pandemic the poor are bearing the vast majority of the nations suffering. Because the top 10% owns the vast majority of the stock market, the stock market can largely be used as a gauge for how the wealthy in America are faring financially. The success of the S&P 500 shows that the wealthy will continue to thrive as the poor suffer greatly. The unemployment rate still remains at historic highs and shows how the masses in America are faring. If the US is to succeed as a nation, we must remain a land of opportunity for all. The pandemic is exposing the structural issues in America that disadvantage the poor. The issue goes deeper than just the stock market, however, as the pandemic poses a lose-lose scenario for the poor in America, meanwhile, higher wealth/income individuals are far more likely to have jobs that can transfer easily to working from home. The poor, by contrast, have a higher risk of losing their jobs and suffering financially, or for those that maintain their jobs, increasing the risk of contracting COVID-19.

    • 9:48 pm - August 20, 2020

  • qwerty

    Although the stock market reaching a new high may seem like a good thing on a surface level, taking a deeper look into the situation reveals a greater problem. Early in the pandemic, the federal government consistently ignored the needs of the American public in favor of bailing out large corporations. The fact that now the stock market is booming while there are such large unemployment and underemployment rates and millions of Americans are facing eviction is truly sickening, revealing the deeper problems of our society and our mismanagement of priorities. Members of government continue to sell out to corporations to meet their own corrupt, financial interests while the materialistic needs of our citizens are largely disregarded.

    • 12:38 pm - August 21, 2020

  • APgovrocks

    The recent transition to a bull market is a good indicator of the United State’s determination to go back to normal. The pandemic created such a large amount of uncertainty that economies around the world plummeted. Now the United States is gaining confidence that America can go back to normal. To get there, however, the unemployment rate will ned to be addressed. As polling suggests, Americans want to get back to work. Americans are restless in their homes while other nations are emerging from the pandemic slump. In addition to slowing the spread of Covid-19, the tight restrictions imposed on the American people has severely handicapped the economy during the pandemic. A slow-moving economy is a recipe for disaster in the stock market. The high unemployment rates are a result of this shutdown. There is hardly any inentive for employers to pay Americans who can’t go to work. As people go back to work in states like Florida, it is only natural that the economy will begin to climb. However, the spread of the virus likely to increase at the same time. Our only consolation is that America has prevented an overloading of its hospitals by flattening the curve. This win-lose situation will be a popular issue in the next presidential election.

    • 12:04 am - August 22, 2020