Earnings are down 42% while the market is flat over march. Why are people assuming total economic collapse is great? Are they assuming iPhones will enter a massive growth spurt just because people are staying home?
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This isn't really a quant finance question, but i'll offer my 2c:
(a) interest rates are 1% lower than before, which increases the P/E multiples of all stocks
(b) it is assumed that earnings will bounce back strongly in 2021/22, especially if a vaccine is discovered
(c) the stock market is not very reflective of the main street economy any more - a significant percentage is big tech, which has been less affected by the stay-at-home restrictions of the pandemic.
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A would take a long time. B doesnt explain why it's booming past the peak. C seems valid. – D J Sims Aug 08 '20 at 18:48
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Perhaps there is also residue of the 2008 financial crisis in Wall Street mentality: while there is an oversupply of liquidity through unprecedented government stimulus, unlike 2008 (and lessons learned from it) credit markets are well-oiled and healthy - that cash has to find its way somewhere and tech+pharma+financials are the beneficiaries; while hospitality+manufacturing (for good reason) are the underdogs.
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