Congress is deadlocked over thenext stimulus bill.
Officially,10.2% of people are unemployed, though economists say the actual number is much higher.
Expanded unemployment benefits expired last month, leaving millions of people unable to pay their bills.
So with so much economic turmoil, why is the stock market on fire?
Did Wall Street miss the memo about how bad things are right now?
Small businesses are struggling, but they arent represented on stock indexes.
The big three are the Dow Jones Industrial Average, the S&P 500 and NASDAQ.
They track the stock prices of some of the biggest corporations in America.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
But guess whos not represented in a stock index?
Your favorite watering hole.
The guy who cuts your hair.
Small businesses have laid off more people than larger companies.
Theyve reduced the number of employees by 40% since January.
Did you know?
The stock market only tells us what investors think will happen.
The stock market isnt a snapshot of where were at.
It just tells us where investors think were heading.
Think about it: Youd buy stock in a company if you think it can earn money.
You wouldnt care if recent profits had been dismal if you think better times are ahead.
Youd sell stock in a company if you think it will lose money.
Apply those principles to the entire stock market.
Soaring stock prices show that investors think companies can make money moving forward.
Case in point: Stocks plummeted back in February as investors panicked over potential virus-induced catastrophe.
But that wasbeforecoronavirus cases exploded in the U.S. and people began losing their jobs en masse.
Investors think well have a quick V-shaped recovery…
States have reopened.
Theres optimism about a coronavirus vaccine.
And it isnt just seasoned traders hoping to enjoy the ride up.
… but investors arent always right.
Even epidemiologists dont know what the coronavirus will do over the next few months.
So its not like investors know how this all shakes out.
I base this on my belief that many Americans seem to be ending social distancing prematurely.
The question isnt just about what coronavirus will do.
We also dont know what Congress will do.
Many economists say a W-shaped recovery is likely if Congress doesnt provide more relief.
Amazon, Apple and other tech giants mask reality.
These companies have also gained from people staying at home.
After all, were doing a lot of shopping online.
Were spending more time on social media.
Were connecting with friends, family and co-workers using devices instead of seeing them face to face.
But the picture is a lot different in other sectors, like travel and hospitality.
Stock prices for smaller companies have also been slower to rebound.
The Federal Reserve made it easier for corporations to take on debt.
When corporations and governments need to borrow money, they issue bonds to investors.
The weird thing is, the Fed actually hasnt bought many bonds just yet.
Of course, just because a company can issue bonds again doesnt mean its underlying business is any healthier.
A company cant survive long term if they cant bring customers back.
OK, So Whats a Typical Investor Supposed to Do?
Then, ignore the day-to-day fluctuations of the money you do decide to invest in stocks.
Dont take any sharp turns or make erratic moves in the midst of turmoil, Elliott said.
Position your investments for long-term success, and stick to that plan through good times and bad.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
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