London Daily

Focus on the big picture.
Tuesday, Jun 02, 2026

How can Wall Street be so healthy when Main Street isn't?

How can Wall Street be so healthy when Main Street isn't?

The stock market is not the economy. Rarely has that adage been as clear as it is now. An amazing, monthslong rally means the S&P 500 is roughly back to where it was before the coronavirus slammed the U.S, even though millions of workers are still getting unemployment benefits and businesses continue to shutter across the country.

The S&P 500, which is the benchmark index for stock funds at the heart of many 401(k) accounts, ended Wednesday at 3,380.35 after briefly topping its closing record of 3,386.15 set on Feb. 19. It’s erased nearly all of the 34% plunge from February into March in less time than it takes a baby to learn how to crawl.

The U.S. and global economies have shown some improvements since the spring, when business lockdowns were widespread, but they are nowhere close to fully healed. The number of virus cases continues to rise across much of the United States, and federal and local politicians for the most part lack a strategy to contain it. Many industries, such as airlines, hotels and dining, could take years to recover from the damage.

The Federal Reserve and the U.S. government get a lot of the credit for the rally after pouring trillions of dollars into the economy. Profits also remained incredibly resilient for the stock market’s most influential companies, such as Apple and Amazon. Rising hopes for a potential vaccine to halt the pandemic, meanwhile, have encouraged investors to look past the current dreary statistics.

Here’s a look at how Wall Street has flourished while Main Street struggles:

THE MARKET’S BIG GUNS


The corner bars, the family restaurants, the hair salons and other small businesses across the U.S. that are teetering or closing for good aren’t listed on the stock market. Apple, Microsoft, Amazon, Facebook and Google’s parent company are, and movements in their stocks alone are dictating the action in the S&P 500 more than ever before.

The pandemic has accelerated work-at-home and other trends that have boosted Big Tech, and their profits are piling up. The five big tech-oriented giants are now worth a combined $7.6 trillion, and by themselves account for more than 22% of the S&P 500′s total value.

Because stocks with the biggest market values carry the most weight in the S&P 500, the movements of Big Tech matter much more than what airlines, cruise-ship operators or other still-struggling companies are doing. American Airlines is down more than 50% for 2020 so far, but its much smaller market value means it doesn’t move the needle like Big Tech. It would take 280 American Airlines to have the heft of one Apple.

The stock market has seen some broadening out of gains recently, with stocks of smaller companies doing better. But Big Tech has done the heaviest lifting in the S&P 500′s rally.

HELP FROM WASHINGTON


A famous saying on Wall Street is: Don’t fight the Fed. The central bank is doing everything it can to support the economy, from cutting interest rates to nearly zero to the unprecedented promise to buy even riskier corporate debt. It’s all aimed at ensuring lending markets have enough cash to run smoothly and to prevent prices from going haywire. Economists say the moves have helped avoid a 2008-09 style meltdown of the financial system.

The Fed has signaled that it will keep its benchmark short-term interest rate at nearly zero through at least 2022, and low rates are often like steroids for stocks. With Treasurys and other bonds paying relatively little in interest, some investors are turning instead to stocks, gold and other investments, boosting their prices.

Congress also approved an unprecedented amount of aid for the economy. Some portions of that aid have already expired, and another economic relief package is tied up in partisan rancor on Capitol Hill. But many investors seem to expect Washington to eventually come to a compromise and throw another lifeline to the economy.

Meanwhile, the economy is recovering but at a much slower pace than its rapid collapse in the spring. After shrinking at an annual pace of 32.9% in the April-June quarter, economists forecast it will rebound at a 20% annual pace in the July-September period. The unemployment rate is 10.2% and is expected to remain in the high single-digits through at least the end of this year.

THE NATURE OF THE MARKET


Investors are setting stock prices now based on where they see corporate profits heading in the future. And for many on Wall Street, the future looks brighter than the bleak present, in large part because of hopes that a vaccine for the new coronavirus could help things get back to normal.

“Main Street is the now, Wall Street is the future,” said Sam Stovall, chief investment strategist at CFRA Research.

Companies have begun final-stage testing of potential vaccines for COVID-19, and many investors are hopeful that something could be available either late in 2020 or within a year. A return to normal could help the economy get back on track and perhaps boost profits back to record levels. Stock prices tend to track with corporate earnings over the long term.

The same look-ahead mentality sent the stock market tumbling severely earlier this year, before the worst of the recession arrived. Stocks began falling in late February, a month before the number of layoffs began exploding, for example. The S&P 500 hit what turned out to be its low point on March 23, the same week that the government reported a record number of U.S. workers filed for unemployment benefits, nearly 6.9 million.

“Wall Street continues to look six to nine months down the road,” Stovall said.

Of course, many risks still remain for the market despite all its ebullience.

For all of Wall Street’s optimism, talks in Washington on more stimulus could break apart and deprive the economy of the aid investors say it crucially needs.

Rising tensions between the United States and China are also hanging over the market. The world’s two largest economies have longstanding trade issues, and the United States has recently been cranking up the pressure on Chinese technology companies.

And the virus remains the ultimate wild card. If a vaccine doesn’t hit the market within the next year, all the hope that has helped build up Wall Street’s rally could quickly vanish.

Comments

Oh ya 6 year ago
How can you even ask such a stupid question? Why is wall street healthy. Because the goverment is printing trillions of worth less everyday dollars. The goverment is now buying even junk bonds trying to keep the wheels on the wagon. The economy was crashing before the virus as they were pumping billions a night into the REPO market to stop banks from imploding as the banks would not lend to each other even very short term. Trump needs this to ladt to November. Maybe the reporters should be telling the truth about the Fed has been screwing average joe since 1913 when it was created on Jekyll Island and the US Government gave the right to 6 jew banks to coin US money, or when in 1971 Nixon closed the gold window thus allowing the goverment to print as many un backed USD as they wanted, or in 2000 when President buttwipe allowed the investment banks merge with saving banks thus making it possible for them to get government bailout money. Just maybe reporters should be honest. I know that is but a dream.

Newsletter

Related Articles

0:00
0:00
Close
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
Knife Attack at Swiss Train Station Leaves Three Injured in Suspected Act of Domestic Terrorism
Transnational Extortion Gang Threatens Canadian Police With Army of One Thousand Armed Operatives
Australia Imposes Forty-Two-Day Quarantine on Cruise Ship Passengers Following Deadly Hantavirus Outbreak
International Monetary Fund Unlocks Seven Hundred Million United States Dollars for Sri Lanka Following Economic Reforms
Australia Launches Record One Point Four Billion Dollar Lawsuit Against Chemical Giant 3M Over Contamination
China and Canada Foreign Ministers Meet in Ottawa in Effort to Stabilize Strained Diplomatic Ties
Indonesia Demands Urgent United Nations Security Council Reform Amid Escalating Global Conflicts
Extreme Weather Patterns Trigger Severe Drought in Madagascar and Destructive Flooding in East Africa
Indian State of Karnataka Faces Political Upheaval as Chief Minister Siddaramaiah Abruptly Resigns
Philippines and Japan Reaffirm Defense Ties as Crucial for Indo-Pacific Regional Stability
Norway Joins French Nuclear Deterrence Initiative in Major Shift for European Security Architecture
Global Critical Mineral Alliances Expand as Western Nations Move to Counter Chinese Supply Dominance
United States Imposes Fifty Percent Tariffs on Mexican Steel and Aluminum Ahead of Trade Pact Review
European Union and China Head Toward Major Trade Conflict Over Clean Technology Exports
United States Economic Growth Severely Downgraded to One Point Six Percent as Stagflation Fears Mount
World Health Organization Warns Central African Ebola Epidemic is Outpacing Containment Efforts
United States Treasury Department Conditions Sanctions Relief on Reopening of the Strait of Hormuz
Iranian Air Defenses Intercept and Destroy United States Military Drone Over Bushehr Province
Iranian Armed Forces Launch Ballistic Missiles Toward Unspecified Targets Prompting Regional Condemnation
United Nations Secretary-General Warns Global Order Facing Highest Level of Conflict Since 1945
Israel Issues Sweeping Evacuation Orders in Southern Lebanon Amid Intensified Hezbollah Conflict
Russia Announces Systemic Military Strikes Targeting Ukrainian Defense and Energy Infrastructure
United States and Iranian Negotiators Reach Draft Agreement to Extend Ceasefire and Resume Nuclear Talks
United Nations Security Council Deeply Divided Over United States Capture of Venezuelan President
US and Iran Exchange Direct Military Strikes Amid Fragile Gulf Ceasefire
World Health Organization Warns of Catastrophic Ebola Outbreak in DR Congo
Russia Threatens New Wave of Strikes on Ukrainian Infrastructure and Embassies
Scientists Warn Atlantic Ocean Currents Could Collapse Faster Than Projected
Anthropic Reaches $900 Billion Valuation in Historic AI Funding Round
Washington Imposes Crippling Sanctions on Iranian Maritime Authority
Japan and the Philippines Initiate Strategic Intelligence-Sharing Pact
Microsoft Deploys Autonomous Computer-Using AI Agents to Global Markets
Anthropic Secures $45 Billion Compute Infrastructure Agreement With SpaceX
U.S. Director of National Intelligence Resigns Amid Administration Shakeup
Micron Technology Crosses Trillion-Dollar Valuation Amid Unprecedented Hardware Demand
Canada and Germany Finalize Historic Long-Term LNG Export Agreement
China Expands International Travel Restrictions on Domestic AI Researchers
Japan Approves Sweeping Overhaul of National Intelligence Apparatus
Global Airlines Scramble Logistics as Middle East Airspace Remains Fractured
Japan's Naphtha Imports Plunge 47 Percent Amid Strait of Hormuz Closure
Global Crude Prices Retreat Below $96 as Gulf Tensions Momentarily Ease
Generative AI Outperforms Human Baselines in Landmark Global Creativity Study
NASA Partners With Private Aerospace to Unveil Permanent Lunar Base Architecture
South Korean Equity Markets Surge on Next-Generation Memory Chip Frenzy
×