越乱越涨？从历史看，美国股市为何总是对骚乱视而不见

Markets closed higher on Monday, as investors largely ignored widespread protests over the weekend and looked instead to optimism over the economy beginning to recover.

Despite increasing civil unrest this weekend due to protests in cities all across America following the killing of George Floyd by police in Minneapolis, the S&P 500 rose roughly 0.4% and the Dow followed suit on the first day of June.

"The markets are taking in stride a lot of concerning political developments and an economy that is just emerging from a nationwide lockdown," says Edward Jones' Nela Richardson. "One of the reasons is that markets are forward-looking, so they’re not just looking at present circumstances."

Markets continued gains from last week, as investors watch for optimism around the slow reopening of many states and marginally higher manufacturing numbers. The Institute for Supply Management's May manufacturing index rose to 43.1 from 41.5 in April, up from a four-month decline, the ISM reported on Monday. Eli Lilly also reported starting a human trial for its coronavirus antibody treatment amid a backdrop of disappointing virus drug testing results from those including Gilead Sciences.

Yet market observers may be scratching their heads at why markets have seemed to brush off much of the horrible headlines in recent weeks—from massive unemployment numbers to nationwide outrage over the death of Floyd and other African-Americans at the hands of police.

Edward Jones' Richardson suggests the market has consistently looked to the unprecedented fiscal response and support from the Fed and the federal government, "rather than the near-term challenges that the country is facing, both economically when it comes to the job losses, the drop in 2nd quarter GDP, and politically—the fact that we are seeing such a divisive and polarized reaction nationally in an election year," she notes.

Historical impact

Historically, "social unrest issues have very little long-term impact on markets," David Trainer, CEO of investment research firm New Constructs, said in a note Monday.

During previous periods of civil unrest and protests, markets similarly largely ignored tumultuous events. After the assassination of Martin Luther King Jr. in 1968, markets dipped briefly on the day of his death, down 0.5% from April 4 to April 5, but rose roughly 3.5% by April 11, 1968. Similarly, the riots following the acquittal of police officers who had beaten motorist Rodney King in 1992 didn't disrupt markets too dramatically, as the S&P 500 remained relatively flat from the beginning of riots on April 29 to May 1, and rose some 1.2% from April 29 through May 4, 1992. In 2014, the riots in Ferguson, Mo., triggered by the fatal shooting of Michael Brown by police, prompted markets to fall only 0.16% on the Monday through Tuesday following the start of protests on August 9, and saw markets gain 2.86% from August 11 through August 21, 2014.

In fact, strategists and analysts suggest markets often disconnect from horrible realities and headlines. Even in 1968, markets finished the year up over 7%. "1968 was the year that 'shattered America' and many tumultuous events and violence took place in that year. And despite that, the equity markets managed to perform solidly," Tom Lee, head of research at Fundstrat Global Advisors, wrote. "1968 is a reminder that stocks and world events are not always connected."

Second wave and unemployment

While the impact of nation-wide protests on markets and consumer sentiment may remain to be seen, investors are grappling with several other headwinds this week.

According to those like Richardson, "the identified, big bad villain" in the recovery is the potential for a second wave of the coronavirus—and as the economy begins to reopen, the threat of spiking infections is a top concern.

Some voiced worries that "mass gatherings could spark concerns about a second wave of the virus," Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note Monday. "Second wave fears could halt reopening or keep behavior cautious."

Richardson suggests that "whether that second wave comes from a bunch of people having a pool party or something more extreme to watch, which is mass protests, ... the full spectrum of that civil engagement … is a concern," she says.

And while markets have largely brushed off abysmal unemployment numbers in recent weeks, Richardson for one will be watching jobless claims on Thursday, and looking for signs that much of the job losses are temporary. "If there’s a change in that narrative, I think that would have an effect on the markets," she says.