The great disconnect: the markets & the economy

Key Takeaways

  • The recent stock market rally has left many investors scratching their heads on what is driving the rally in the midst of terrible economic data.
  • Resilience from a narrow group of mega cap technology and healthcare names have been the salvation of the recent rally.
  • Massive stimulus and a concentrated rally have made it harder to read what’s going on in the a stock market, partially answering the question of how the stock market appears to have become so unhinged from the real economy.

Over the past few weeks investors have likely struggled to reconcile a rallying stock market and a stumbling economy. Since the lows on March 23, 2020, the S&P 500 has rallied over 28% through May 15, 2020 reducing the year to date losses to -10.7% despite record unemployment of 14.7% .

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