US market storms ahead

While the US has reeled economically from the impact of Covid-19, the main US stockmarket index has hit record highs. What explains this divergence?

The main US stock market index hit several new all-time highs in August.

Chart showing the S&P 500 performance in 2020

So far, the US has had a difficult 2020:

Despite these headwinds, the main US stock market index, the S&P 500, reached several new highs in August, having risen more than 50% from the low that it plumbed on 23 March 2020 as the pandemic took hold.

On the face of it, the new Wall Street high looks seriously out of sync with life on the ground in Main Street, USA. However, there is some logic in the market’s performance:

Similar arguments apply in other markets: the best investors, like the best drivers, look and think ahead.

The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The value of tax reliefs depends on your individual circumstances. Tax laws can change.

The Financial Conduct Authority does not regulate tax advice.