Stocks Are Rallying Despite Nationwide Protests. That’s Typical.
Despite growing protests in U.S. cities across all states, the stock market is continuing to rebound from the coronavirus pandemic’s economic contractions, according to the Wall Street Journal.
Over the last 4 out of 5 days, the S&P 500 has posted positive gains, growing 4.7 percent this week. Now, the S&P 500 only holds a loss of 1.3 percent with the Nasdaq Composite in its way to close at a new high. The U.S. economy seems to be pushing past its lows as Friday’s jobs report announced that jobs were actually added in May. The benchmark 10-year U.S. Treasury notes’ yield also grew to 0.926 percent, a new record since late March.
Yet, economists project complications for the labor market as protests and looting stall stores from reopening. The protests, onset by the tragic killing of George Floyd in police custody, as well as the government’s response to them, have triggered mass civil unrest and a somber tone across the nation. However, stocks continue to climb at an optimistic rate, but history only validates this.
Chief investment strategist at Charles Schwab & Co., Liz Ann Sonders said, “There’s a heck of a lot that the market is seemingly ignoring right now, in addition to the protests. But if you look back at the history of large-scale civil unrest…the market tended to sort of look through that. You didn’t tend to see significant weakness either while it was happening or in the aftermath.”
Economists are comparing current times to those after Martin Luther King Jr.’s assassination. While protests filled the country after the killing, the S&P 500 also grew by 2.9 percent, and by the end of the year had posted a gain of 7.7 percent.
Thomas Lee, co-founder and head of research at Fundstrat Global Advisors, said, “The stock market is not something that necessarily goes up or down with the mood of the country.” As of now, traders seem to be focusing on the economy’s rebound and corporate earnings.