Markets Suggest the Economy Is Booming But the Recovery Has a Long Way to Go

Markets Suggest the Economy Is Booming But the Recovery Has a Long Way to Go

Markets are signaling that an economy that plunged into its deepest recession in decades just a year ago is ready to roar.

Major U.S. stock indexes have set 32 record highs in 2021, including Wednesday's 424-point surge by the Dow industrials to 31962. Long-term bond yields are rising, showing increasing demand for funds from consumers and businesses, and inflation expectations are at multiyear highs. The price of everything in markets, from a barrel of oil to a share of mall retailer GameStop Corp. to a bitcoin, seems to be going up.

And moments of caution have been short-lived. Earlier this week, investors sold tech stocks, concerned that the rising long-term interest rates brought by an improving economy would make tech less attractive—in effect, that the economic outlook was too good. But Fed Chairman Jerome Powell on Tuesday reiterated that low rates would be around for a long time. Tech stocks promptly bounced.

The everything rally shows that investors believe the fun is just getting started. They believe