US Markets Continue to Rally Despite Confirmed Recession
While the US officially entered a recession on Monday, the Nasdaq and S&P 500 indexes both hit highs.
Monday was a day of contrasts for the US economy, as stocks continued to bounce back even as the National Bureau of Economic research confirmed that economic growth hit a peak in February and has since been contracting.
As it emerged that the economic downturn began before lockdown measures were put in place in the US, but after China and other countries were severely struck by COVID-19, the Nasdaq was reaching an all-time high at 9,924.75 points, a bounce of 44% up from its March 23 low.
The S&P 500 also saw a gain of 1.2%, finally recouping all of its COVID-induced losses from earlier in the year. At the same time, the Dow Jones Industrial rose by 1.7%.
The markets’ optimism can be traced back to the Burea of Labor Statistics’ surprising announcement on Friday that unemployment in the US fell by 1.3% in May, hinting at a faster economic recovery than expected. Though the accuracy of these figures has since come under dispute, the positive sentiment has remained.
European stocks were not buoyed by America’s enthusiasm, with Tuesday morning seeing Germany’s DAX slide by 1%, accompanied by a dip of 0.6% from Britain’s FTSE 100 and 0.7% by France’s CAC 40.
Lee Wild, head of Equity Strategy, cautioned investors that “the full economic consequences of the pandemic are still to be felt.”