Will the Disconnect Between Wall Street & Main Street Continue?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Today’s article features the SPY, and examines whether the disconnect between Wall Street and Main Street will continue. Read on for all these important investing details.

While the disconnect between Wall Street and Main Street seems as old as the creation of the stock market itself and has reached baffling proportions in the past few months, it didn’t really start out that way. The New York Stock Exchange (NYSE) was formed over 200 years under a tree by Wall Street, in what became known as the Buttonwood Agreement, in an attempt to establish some rules after the 1792 financial panic.  

It consisted of some 24 stockbrokers and merchants signing an agreement establishing the parameters that they’d only trade with each other and represent the interests of the public, which meant that the confidence that they had in each other was the confidence that they had in the market. Meaning the success, or failure, of the merchants, AKA Main Street, would be the determining factor in how Wall Street valued the stock. 

We’ve come a long way from this quaint notion; the progression from a true stock exchange which served the purpose of a pathway for companies to raise capital by allowing individuals to buy ‘shares’ as a manner of partaking in company growth and future profits to the dominance of large institutions to near-total financialization of stock-related securities has led to a large disconnect between Wall Street and Main Street.  

The explanation or justification is the now common rejoinder that, “the stock market and the economy are two different things.” When people talk of the ‘real’ economy their thinking of the local restaurants, the barbershop, and dry cleaner.  And it’s not that those businesses aren’t important (they are the backbone of the community and local jobs, it’s that they lack the size and scale to drive a higher correlation between what you see with your own eyes and what the stock market ought to correspondingly look like.  Collectively they make up the economy but have no impact on the stock market that comprises the “SPDR S&P  500 (SPY)” 

The stock market isn’t meant to mirror the economic activity you perceive on your morning walk. Especially now, with people stuck inside and forced to transact on screens. Everything is now taking place away from your eyes, off Main Street, in server rooms, and cloud computing facilities you’ll never walk through or greet your neighbors inside of. Online activity is taking a massive share of all commerce and human attention right now. It isn’t so strange that the companies benefiting most from online activities such as “Amazon (AMZN)” and “Apple (AAPL)” are seeing their stocks rally in response and given their huge weighting the SPY taking the stock market back levels prior to the shutdown.  

Another reason the Wall Street seems able to ignore the Main Street is that while it’s easy to see the unprecedented economic devastation because it’s personal, it’s harder to contextualize the magnitude of the — over $3 trillion in fiscal stimulus and some $5 trillion money creation by the Federal Reserve. Unfortunately, most of the latter is also accruing to corporations rather than individuals. And that’s how Wall Street can keep ignoring Main Street.  

Want More Great Investing Ideas?

9 “BUY THE DIP” Growth Stocks for 2020

Beware 3,000 on S&P?

7 “Safe-Haven” Dividend Stocks for Turbulent Times


SPY shares were trading at $293.83 per share on Friday morning, down $1.05 (-0.36%). Year-to-date, SPY has declined -8.17%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Option Sensei


Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for TheStreet.com, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News