Yes, stocks are up again. No, recession worries aren’t gone
NEW YORK — The U.S. economy is sending some worrying signals about a possible recession, yet the stock market has gone on a what-me-worry ride toward record heights.
What gives?
Put simply, while the stock market watches the economy, the two don’t always move in lockstep. If investors see that companies are still bringing in profits, and stocks don’t appear too expensive, they’ll risk an investment even if the economy hasn’t gotten an all-clear on the recession watch.
This week, the S&P 500 and Dow Jones Industrial Average climbed back to within 1% of their record highs set in July. A big reason is the recent easing of tensions in the U.S.-China trade war ahead of talks scheduled for next month, potentially diminishing the threat to the profits of U.S. companies. In addition, the Federal Reserve is expected to again cut interest rates. Lower rates make bonds less attractive investments and can, in turn, make investors more willing to sink their money into stocks.