Why stocks have rallied to record highs despite sharp economic decline - Business Insider

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4 reasons why the stock market has rallied to near record highs despite the sharpest economic decline since the Great Depression, according to LPL

Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.The stock market is on the verge of hitting record all-time highs, with the S&P 500 trading less than 1% below its intraday high of 3,393 on Tuesday.

Given the stark difference between the stock market and the economy, LPL provides four reasons why the stock market can be so disconnected from the underlying economy.As stocks hit record all-time highs, the underlying economy is still showing signs of weakness due to the rolling economic shutdowns caused by the COVID-19 pandemic.

So how can there be such a stark disconnect between record highs in the stock market and an underlying economy that is the worst since the Great Depression? Again, this thinking is aligned with recent commentary from Fundstrat's Tom Lee, who explained in early August that while large-cap tech stocks are trading at a price to earnings multiple of 20x to 30x,

 

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A clear indication why the stock market is not a real measure of economic growth

Smoke and mirrors.

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