Nasdaq Hits Record while U.S. Economy Is Officially in Recession

UTC by Daria Rud · 3 min read
Nasdaq Hits Record while U.S. Economy Is Officially in Recession
Photo: Depositphotos

Nasdaq Composite became the first of the big three indexes to bounce back to a record high. On Monday, it rose to 9,924.75, closing at the highest since February 19 when it ended at 9,817.18.

On Monday, the National Bureau of Economic Research (NBER) officially declared the U.S. economy to be in a recession. However, this announcement did not disturb Nasdaq Composite from marking a new bull market and hitting a new record.

Until February this year, the U.S. economy had been on an upswing. This expansion lasted 128 months and was the longest in the history of US business cycles dating back to 1854. Previously, the record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.

The National Bureau of Economic Research said:

“The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession.”

The bureau added:

“The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.”

According to NBER, to determine the economic peak, they considered a number of employment and production indicators. In particular, the committee looked into the payroll employment measure as the most reliable comprehensive estimate of employment. This series reached a clear peak in February.

However, there are signs that the worst is over. Hopefully, the economic trough was in April and since then, the US economy has started to rebound. As the COVID-19 pandemic is stepping down, people are getting back to normal life. Businesses are reopening, traveling slowly but resuming. On Friday, the government announced the economy added millions of jobs, which upended expectations of 8 million jobs lost.

Nasdaq Composite Became the First Index to Hit Record

Seems like the recession has hardly impacted stock markets, as stocks are rising and market indices are setting new highs. As investors’ optimism about the progression of economic reopenings is growing, Nasdaq Composite ( (INDEXNASDAQ: .IXIC) is surging. On Monday, it rose to 9,924.75, closing at highest since February 19 when it ended at 9,817.18. Since its low of 6,860.674 on March 23, Nasdaq Composite surged by 44%. Besides, its 11-week upward movement has been the largest for the period since late 2001, during the dot-com boom.

Nasdaq Composite became the first of the big three indexes to bounce back to a record high. However, the other two have also shown great performance. On Monday, all the segments of the S&P 500 (INDEXSP: .INX) rose, with the energy sector being the best. Airlines, cruise lines, retailers, and shopping malls were also the big gainers on the S&P 500. It closed at 3.232,39, or 1.20% up.

As for the Dow Jones Industrial Average (INDEXDJX: .DJI), it ended 1.70% up yesterday, at 27,572.44.

Some experts are warning that the stock market may have risen too quickly. Investors may be disappointed with the biggest risk being another wave of coronavirus infections that leads to more lockdowns.

Tom Martin, senior portfolio manager at Globalt Investments, said:

“It all starts with the virus itself, and there haven’t been any immediate rise in infections. There’s a lot of risk that businesses and the economy don’t recover as fast. When money starts running out in July, are we enough on a path to getting people employed and businesses open?”

Earlier, Fed Chair Jerome Powell said the U.S. economy could feel the consequences of the economic shutdown for more than a year.

Business News, Indices, Market News, News
Daria Rud
Author Daria Rud

Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.

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