What’s behind the stock market’s strong third quarter?

David Brancaccio, Nova Safo, and Alex Schroeder Oct 1, 2020
Heard on: Marketplace Morning Report
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Angela Weiss/AFP via Getty Images

What’s behind the stock market’s strong third quarter?

David Brancaccio, Nova Safo, and Alex Schroeder Oct 1, 2020
Angela Weiss/AFP via Getty Images
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The stock market in the quarter that just concluded generally did very well, despite, well … everything.

Marketplace’s Nova Safo has been looking into why. The following is an edited transcript of his conversation with “Marketplace Morning Report” host David Brancaccio.

Nova Safo: It’s been a volatile quarter. And we’ve seen some pullback. But, overall, the S&P 500 gained 8.5%, the Dow is up 7.5% and the Nasdaq is up 11% for the quarter. And the Nasdaq is a tech-heavy index, and we know that Big Tech has done very well. Apple’s market valuation hit $2 trillion.

Tesla’s stock almost doubled — it’s market valuation is now at $400 billion. And, for perspective, you took Ford and GM, added them together and multiplied by five, you’d still fall short of Tesla.

David Brancaccio: But, overall, considering how much markets fell off a cliff for a time this spring, where are we year to date?

Safo: That’s a mixed picture. The Dow lost 2.5%, but the NASDAQ gained 24% — again Big Tech. But then you look at energy stocks, and they’re way down. So there are winners and losers.

Brancaccio: Stepping back, how did this happen given the pandemic?

Safo: Low interest rates are a big factor. The Fed has said they’re going to stay low for a long time. So, for investors looking for growth, stocks are it.

Brancaccio: Competing bonds can seem less attractive so up go stocks. OK, what else?

Safo: We are also seeing some level of optimism among investors that we might have a vaccine soon.

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