America is in turmoil and stocks are booming. Is the market broken? - CNN - 0 views
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The stock market is not the economy. But rarely has the gap between Wall Street and Main Street felt so wide.
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The United States is going through its worst race crisis since 1968 following the death of George Floyd, an unarmed black man, at the hands of a police officer in Minneapolis. Riots have hit cities across the nation. Looting is rampant. And President Donald Trump is threatening to send in the military to stop the violence.
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The civil unrest could exacerbate the coronavirus pandemic that has already killed more than 100,000 Americans. That in turn could deepen the economic collapse that has forced more than 40 million people to file for unemployment.
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The S&P 500 closed Tuesday at the highest level in nearly three months. The Nasdaq has spiked 40% since March 23, fueled by the resilience of Big Tech, and is now within striking distance of all-time highs.
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unprecedented stimulus from the Federal Reserve, and investors not wanting to miss out on monster returns once the economy recovers.
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That means that while Main Street is still grappling with coronavirus, racial crisis and the impacts of both, Wall Street is doing just fine. Fed policy has allowed markets to decouple from economic reality.
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Although the unrest was initially sparked by the killing of George Floyd, the continued broader economic discontent is an undercurrent.
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The divide between rich and poor was worsened by the Great Recession and its aftermath. The US government's response relied heavily on easy money from the Fed, rather than the kind of fiscal stimulus that can help lower-income Americans.
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First, the coronavirus pandemic disproportionately hit poorer Americans, many of whom work in the hospitality and service sectors rocked by the pandemic. Nearly 40% of low-income workers lost their jobs in March alone, according to the Fed.