Wall Street Reaches a Record
The SP 500 climbed to a record on Tuesday, reaching a level few would have predicted a few months ago, and defying the economic storm facing the United States.
The index rose only slightly, but it was enough to eclipse a high reached in February, before the fast-spreading virus set off a staggering decline in stock prices.
The recovery has been fueled by trillions of dollars pumped into financial markets by the Federal Reserve and enormous spending by the government to protect American workers and businesses from the worst of the downturn.
A run-up in shares of technology giants that, because of their sheer size, hold sway over the entire market has also propelled the stock index. Put together, these factors drove a recovery that was so quick that the bear market — defined as a drop of more than 20 percent — that began earlier this year turned out to be the shortest ever, according to records going back to 1929.
The high on Tuesday comes despite the drastic economic toll of the virus, which dragged the American economy into one of the steepest downturns since the Great Depression, crushed corporate earnings and sent unemployment soaring.
Investors have largely shrugged off such concerns, and focused instead on economic updates that have not been quite as catastrophic as expected.
Last week’s retail sales data showing that Americans kept shopping in July, even as coronavirus infections continued to spread, was followed on Tuesday by strong earnings reports from Walmart and Home Depot. Separately, the Commerce Department said that construction of new homes in the United States surged nearly 23 percent in July, to the highest annual pace since February.
That focus on the good news has helped lift the SP 500 by more than 50 percent from its low point in March.
Technology stocks have played a big role in those gains. Companies such as Apple, Alphabet and Microsoft have attracted investors despite the deep downturn in the United States, with buyers betting that those companies are poised to thrive in a stay-at-home economy and emerge from the crisis in an even stronger competitive position.
On Tuesday, Amazon was the best-performing stock in the SP 500, rising 4 percent, with shares of a number of other technology companies — including Adobe and Salesforce — also climbing.
Still, the march higher has also meant that investors have looked past a number of risks that lie ahead. Most prominent among them this week is the inability of lawmakers in Washington to reach a consensus about another economic aid package.
Another is the latest escalation in tensions between the United States and China. The Trump administration said Monday that it would restrict the ability of the Chinese tech giant Huawei to buy a wider array of chips made or designed with American equipment and software.
Article source: https://www.nytimes.com/live/2020/08/18/business/stock-market-today-coronavirus