The stock market has rallied in recent weeks while more than 30 million Americans have filed for unemployment, drawing attention to a disconnect between the stock market and the real economy made apparent by the coronavirus outbreak.
In a newly released interview, New York Stock Exchange President Stacey Cunningham acknowledged that the resilient stock market does not reflect the condition of the economy, since relatively robust sectors like health care and tech make up a large portion of major indexes like the S&P 500 (^GSPC).
Wall Street will inevitably bounce back, Cunningham predicted, while deeper concerns remain about the outlook for the real economy that affects everyday Americans.
“When we say the market, it's not a reflection of the strength of the economy,” says Cunningham, who has served as NYSE president since 2018. “It's a reflection of the public sentiment of the stocks that were in that index that we're looking at.”
Since the S&P 500 reached a low point on March 23, the index had risen more than 26%, as of Wednesday afternoon. Tech giants Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), and Facebook (FB) made up 17.5% of the S&P 500 as of January, CNBC reported. On the whole, stocks belonging to those large tech firms have outperformed other companies and sectors amid the crisis.
“If the market is skewed — the index is skewed — by a number of technology stocks, people will say, ‘Hey, the market is up,’” she adds.
“When you look more broadly across their base, we are seeing strength in health care technology, consumer goods, but we're seeing other industries that are hurt more by this pandemic having a more difficult time.”
Payroll company ADP said on Wednesday that more than 20 million Americans lost their jobs in April. When the Bureau of Labor Statistics releases its monthly employment figures on Friday, analysts expect the worst losses since the Great Depression.
“It's important that we recognize Wall Street will recover from this and that won't be a problem,” she says. “That's why the packages that the government has had have been focusing on the individual and how do we put money back in their pocket.”
Cunningham made the remarks during a conversation that aired in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
Cunningham is the first woman president in the centuries-long history of the NYSE. Prior to joining the NYSE in a senior capacity in 2012, Cunningham worked as a managing director and director of capital markets at Nasdaq.
She noted that the stock market’s resilience can divert attention away from individuals and sectors hit hard by the pandemic.
The relative strength of the market “doesn't reflect just the individuals that are impacted through this process,” she says.
“Clearly, we've seen restaurants and and so many gym owners and others that are struggling right now,” she adds.