While US economy shrank 3.5% in 2020, the largest decline since just after World War II, stock markets posted double digit returns. Given that the value of financial investments should depend on the underlying real investments,

(1) Why stock market were soaring when the real economy had its worst contraction? What were the factors that helped pushing up the stock markets ?

(2) When the business press mentioned US stock market performance, does the "stock market" mean the overall performance of all listed stocks?

(3) Check the S&P 500 annual return for 2020, 2021 and 2022 year to date. What are the main reasons for the stock market decline in 2022?

Answer rating: 100% (QA)

1 The soaring of stock markets in 2020 despite the contraction of the US economy was primarily drive... View the full answer