How Can Equities be Doing so Well?

"With the economy getting crushed, some analysts are wondering how equities could have bounced so hard from the March lows.  We understand their confusion.  With unemployment likely above 15% and real GDP falling roughly 30% in Q2, how can equities be doing so well? 

One key to understanding this is that investors don't buy shares of GDP, they buy ownership stakes in a distinct set of companies, many of which are doing quite well despite the general economic carnage. 

... In many ways, the spread of the Coronavirus has given larger well-capitalized companies, particularly technology companies and big box stores that were allowed to stay open, an advantage over Main Street competitors.  And unlike Main Street businesses, a larger share of these companies are publicly traded."

(S&P 3100, Dow 25750 dated 05/11/2020 by Brian S. Wesbury, Chief Economist, Robert Stein, Deputy Chief Economist, with First Trust.

Full article can be read here: https://www.ftportfolios.com/Commentary/EconomicResearch/2020/5/11/sp-3100,-dow-25750