Despite mounting human and economic losses from the coronavirus pandemic, stocks closed at an all-time high on Tuesday, ending the shortest bear market in U.S. history. After three consecutive weeks of gains, the Standard & Poor’s 500 closed at 3389, gaining 0.23% on the day. This marks a remarkable comeback after a recession in March that dragged it down 34% from the previous record set on February 19, as the pandemic tightened its grip on the country.
Investors on Tuesday set aside concerns about the ongoing struggle to avoid pandemic and instead focused on signs of growth in the residential and retail sectors. The number of new homes that were ordered in July increased 22.6 percent to nearly 1.5 million a year on a seasonally adjusted basis, the Commerce Department said. The number of permits for single and multi-family buildings has increased dramatically.
Chris Rupkey, chief financial economist for MUFG Union Bank in New York, said in a note to clients that one of the most important leading indicators of the economy states that it is not only the end of the epidemic recession, but the economic outlook is getting brighter every day.
Walmart, one of the largest retailers in the country, announced that same store sales rose 9.3% for the quarter ended July 31. The company said its online business saw an increase of 97%.
The epidemic, meanwhile, has cost the US economy $19 19 trillion. According to Johns Hopkins University, more than 5.4 million Americans have contracted the corona virus and more than 171,000 people have died. Like previous rallies in the stock market, the financial results of the latest surge have been extremely uneven. Millions of people are running out of money to invest or pay rent in the coming months, while savvy investors are making money. According to the Federal Reserve, only half of Americans own shares, most of them through retirement accounts.
The major milestone for the S&P 500 came a day after high-tech NASDAQ set its own record, which prompted President Trump’s praise on Twitter. The Dow Jones Industrial Average, which is roughly 5 percent off its February high, fell 66.8 points, or 0.2 percent, to end the day at 27,778. The Nasdaq rose 81.1 points, or 0.73 percent, to 11,210 points.
Stock prices plummeted in March after the first outbreak of the corona virus and people were told not to leave their homes to reduce the risk of infection. Since then, Wall Street has suddenly returned. Some companies like Tesla, Wayfair, and Masco have set their own records for stock prices. Perhaps most notably, investors have collected to tech giants with huge cash reserves and whose products are becoming increasingly valuable with work-at-home jobs and distance learning.
The reversal completes the shortest bear market in history. A bear market usually refers to a period of time when a stock is down at least 20 percent from its previous high. A bull market is defined as an increase of 20 percent from the previous low. After the S&P 500 hit a new high, it meant the bear market lasted from February 19 to March 23, when the stock bottomed out and started a new uptrend.