Unemployment is soaring. Corporate earnings are shrinking. And we’re almost certainly in a recession. So why has the stock market — which was down 34% at its bear market low on March 23 — been able to trim a large chunk of its losses even though the economic news remains gloomy?
Simply put: investors are forward-looking, and they are buying in advance of — and in a belief in — better days ahead. That’s one explanation for the market’s 25% rebound rally in the past month.
It’s confounding at times to grasp that concept, especially when things are grim in real-time.