Is the United States stock market being falsely inflated?

Question

I took Macroeconomics and Microeconomics in college, and from what I remember, the stock market reacts positively to positive news, and negatively to negative news. If that's the case, why is the stock market not falling considering all the negative news (foreclosure rates, bank failures, unemployment rates, inflation, wars, etc.)? It seems like there is an exponentially larger amount of negative economic news versus positive economic news, yet the market is still relatively high. Is the market being manipulated, and if so, by whom?

Answer 1

Why do you consider the market to be relatively high?  There are many companies whose stock has fallen because of the overall market that have not suffered because of the mortgage/credit crisis.  GE for instance is down substantially from two years ago, yet earnings and profits are much higher.  3M is trading at the same level as two years ago yet profits are up.  The markets are not nearly as simple as Econ 201 and Econ 202.  When there is good news stocks tend to get over-inflated, while when there is bad news they tend to go down too much.

Answer 2

um, you need to turn your computer screen upside down, b/c that stock market chart your looking at is upside down.

look, we might not necessarily be in the midst of a 1929-style crash, but the markets ARE going down.

just google the various indices and look up their returns over various time periods and you'll see.  we're in the midst of our first official bear market since ??? i think the early 90's maybe?

i mean, the street is getting slaughtered.  over 70,000 layoffs, and as many as 100K more predicted.  two years ago, most people would've laughed at you for suggesting that fifty thousand people would be layed off, but today that would be a gift.   the subprime fallout is still just beginning.  it's getting worse.  bear stearns collapsed.  lehman could be next.   the financial sector is in the toilet.  the market overall has been taking a beating for sometime now.

i'm not sure what moe evidence you'd need.

Answer 3

you need to pay better attention to the stock world.

if you are considering to deal in stocks for a living you need to reconsider.

Answer 4

http://finance.yahoo.com/q/bc?s=^GSPC

If thats good then I would really hate to see what bad news does to it.

Answer 5

Governments and gas people