S&P 500 Breaks New Record; Small Business Picture Is Different
Published Friday, August 21, 2020; 8:00 p.m. EST
(Friday, August 21, 2020; 8:00 p.m. EST) It's a tale of two economies: coronavirus hurts small businesses while the tech giants are immune.
The Standard & Poor's 500 closed at a new record high, but the recovery picture in the overall U.S. economy is not as bright.
The 60 leading economists surveyed in mid-August by "The Wall Street Journal" expect a gradual decline in the unemployment rate to 4.9% by the end of 2023.
However, pre-covid, unemployment dropped to as low as 3.5%, and economists don't expect to re-approach that level, "full employment," for at least several years. To be clear, a complete recovery from the pandemic will take years.
Driven largely by the earnings expected of Facebook, Apple, Amazon, Netflix, Google, and Microsoft, the Standard & Poor's 500 stock index closed Friday at 3,397.16, a new all time high.
While the S&P 500 is full valued relative to its historical norm, it's not trading at anything near an outlandish multiple of expected profits. Valuations on stocks are nothing like the tech-stock bubble in 2000.
Even as the S&P 500 booms, however, the broader economy remains less strong than before the pandemic.
"Despite the recent gains in the (U.S. Leading Economic Indicators) LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam," according to economists at The Conference Board, "The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020."
The Standard & Poor's 500 is one of 10 components of the U.S. Leading Economic Indicators. The LEI is a better way of seeing the expected road to recovery and more accurately reflects what's happening in the real economy.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial or tax situation, or particular needs. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences.
The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
- Latest On Inflation, Consumer & Business-Owner Optimism
- Slower Growth But Economic Outlook Remains Bright
- Labor Market And Inflation Drove Stocks Higher
- Costlier Homes Expected To Appreciate 4% Annually For The Next Five Years
- Leading Economic Index Falls For 16th Straight Month
- Tax-Sensitive Investment Planning In 2023
- A Healthy Recipe For Growth Is Simmering
- Good News About The U.S. Economy
- The New Bull Market Has Broadened
- An Economy Goldilocks Would Definitely Live With
- Monthly Pace Of New-Job Creation Slowed In June, Which Is Good News
- Standard & Poor's 500 Gained 9.9% In Q2 2023
- This Week’s News For Investors
- This Week’s News For Investors Is Very Good
- Why The New Bull Market Theory Was In The News This Past Week
- Strong Jobs Report Caps A Week For The Record Books
- Why Stocks Rose Friday Despite A Rise In Inflation In April
- Weekly Investor Update
- The Confluence Of Bad News For Recent Retirees And Those About To Retire
- Good And Bad News This Week For Investors
- Getting There: The Economic Balancing Act Progressed In March
- Stocks Gained Friday But Closed Fractionally Lower For The Week
- Good News On Inflation But A Recession May Be Hard To Avoid
- Analysis: The First Data Since The Banking Crisis Erupted In March