A demonstrator runs to kick a crowd-control canister during a protest against the death of African-American man George Floyd under Minneapolis police custody, in Oakland, California, May 29, 2020.
Stephen Lam | Reuters
A global pandemic, racial strife, political upheaval — and a rising stock market amid the chaos. While it sounds a lot like 2020 it also has echoes all the way from 1968.
Both years featured history-making levels of tumult, and both could end up being good years for investors. While the current market still has some ground to make up, the trend over the past two-plus months has been aggressively higher, confounding those who can’t reconcile the disconnect.
Maybe it shouldn’t be such a surprise, though. In a market increasingly driven by dispassionate computers that run on algorithms, and investors who at least in theory are always looking ahead, the tendency to gaze beyond the news of the moment is always there.
Through midday, the Dow Jones Industrial average was up 65 points.
“The market always seems heartless, without any emotion, without caring, without empathy. But that’s the nature of the market,” said Quincy Krosby, chief market strategist at Prudential Financial. “The algorithms almost certainly have no shred of empathy. They’re not supposed to.”
Still, the market often will pop or drop on a headline, whether it’s directly market related, an economic data point or some geopolitical development.
More recently, news of potential therapeutics and vaccines for the coronavirus has set the market surging as they’re seen as indicative of hopes that the pandemic can be thwarted. Conversely, the market has tended to look through some awful developments on employment, retail sales and corporate earnings.
While it would have seemed logical that the protests and rioting of recent days stemming from the death of George Floyd in Minneapolis would have had some market impact, major averages on Monday posted small gains while the rest of the country tried to clean up after the mayhem.
“There are many valid reasons to be bearish on risk assets like stocks or corporate debt just now, but history shows markets look through many sorts of tumultuous events and have done so for decades,” said Nicholas Colas, co-founder of DataTrek Research. “That may seem counterintuitive, and perhaps not even ‘fair,’ but it’s absolutely true.”
One of the clearest examples comes from 1968.
Death, destruction and disease
The Rev. Martin Luther King and Robert F. Kennedy were both assassinated. North Vietnam launched the Tet Offensive and the 1968 presidential election featured a highly divisive contest between Hubert Humphrey and Richard Nixon. Protests abounded around the nation and the world, featuring the memorable raised-fist salute from John Carlos and Tommie Smith at the summer Olympic games.
And, of course, there also was the H3N2 “Hong Kong flu” pandemic that…