New York considers hiking taxes for the rich to fill COVID-19 hole
S&P nearly erases pandemic losses, closes just short of record high
The S&P 500 on Wednesday nearly surpassed its record, closing at 3,380.
The gains were just points short of the market's height of 3,386, and means it has nearly wiped out the massive losses it saw in March as the pandemic battered the U.S. economy.
The February record came amid a strong economy, with near-record low unemployment and no signs of major shocks around the corner. Markets came crashing down as the coronavirus made its way to U.S. shores, and outbreaks started shutting down large swaths of the economy.
But amid massive government interventions, which poured trillions of dollars into the economy, the index has recovered most of its losses in just six months.
The resurgent market, however, has been set against a background of one of the worst economic crises in modern American history.
The unemployment rate peaked at 14.7 percent and at 10.2 percent, remains above the the height it reached during the Great Recession over a decade ago. More than 31 million Americans are receiving unemployment benefits. The economy contracted at an annualized rate of 32 percent in the second quarter, the largest quarterly drop on record.
Analysts say the markets have been fueled by near-zero interest rates and trillions of dollars of liquidity the Federal Reserve has pumped into financial markets to ensure they don't dry up.
"I think what happened is that investors are looking toward 2021 and seeing a significant rebound in earnings," said Michael Arone, chief investment strategist for State Street Global Advisors.
"I think expectations are that the economy is recovering and continuing to recover," he added. Poor economic performance going into 2021 could deflate the markets again, he said.