The S & P 500 broke through a record closing high and is poised to recover the bear market decline in the shortest time ever. However, although the rally is exciting, it also highlights that for the majority of investors, the benchmark stock index can sometimes produce great misleading.
the S & P 500 index fell all the way from its high point and then returned to its peak. It took only 175 days, faster than any similar trend in the past. In the previous 12 cycles, it took an average of four years for the index to recover at least 20% of its decline. Since the bottom in March, the S & P 500 has risen about 50%, with more than 40 component stocks doubling. The market value of $12 trillion evaporated earlier recovered.
the S & P 500 index rose 1.6% to 3387.89 on Wednesday, briefly breaking the closing record on February 19. Half an hour before the closing, the stock index fell slightly and finally closed at 3380 points, 0.2% from the historical high.
at the time of the latest rally in the stock market, major companies have released financial reports. This earnings season is a microcosm of the market sentiment driving up the stock market. By all measures, U.S. companies had a bad second quarter, with profits down 33% year-on-year, according to data from the industry research firm. However, compared with the 44% decline expected by analysts, the situation is not as bad as expected, with more than 80% of enterprises better than expected.
although the core stocks of the rally are strong, the performance of other stocks is very weak. Only about one-third of the companies in the S & P 500 index have risen since mid February, and the average stock is still down 6%. The energy sector lagged behind, falling more than 20%.
in short, the epidemic has exposed and exacerbated the serious division that defines contemporary America, and the stock market has become a symbol of inequality. On the winner’s list, technology companies with automation and low asset size are at the bottom, while industries that usually bear greater employment pressure transportation, retail and energy are at the bottom.
“if you invest in the index, then these three, four, four or five companies that push up the overall index will benefit you,” says Jeff mills, chief investment officer at Bryn Mawr Trust Co. “If you invest in this part of the market, that’s great. If you underwrite these stocks, you will certainly be lagging behind, no doubt. “