Stocks Are Writing Checks the Economic Data Can’t Cash
The equity market is putting a lot of value on hope.
Not if you’re the stock market.
Photographer: Spencer Platt/Getty Images
Unlike the bond market, which is largely anchored in economic reality, the stock market is based on hope. Everyone knows and understands that, but it’s still next to impossible to reconcile the latest leg higher in equities — which has pushed the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index to records — with the latest economic data.
Consider Friday, when all those benchmark indexes posted their biggest gains of the week even though a Commerce Department report showed that retail sales in October failed to rebound enough to offset concern about September’s horrible numbers. That was enough to spur JPMorgan Chase & Co., which as the largest U.S. bank should know a little something about the economy, to cut its fourth-quarter estimate of gross domestic product to a meager 1.25% from what was an already low 1.75% on an annualized basis.