Finance

Brexit Impact On Market Overstated

| by Sarah Zimmerman
New York Stock ExchangeNew York Stock Exchange

U.S. stock indexes hit a record intraday high July 13, leading some to believe that the economic effect of "Brexit" may be overstated.

Reuters reports that both the S&P 500 and the Dow hit new highs. S&P 500 hit 2,156.45, which beat out June 12's record of 2,155.40. The Dow additionally reached a milestone mark of 18,390.16. 

The first part of 2016 marked Wall Street's worst start to a year ever. However, stocks have slowly gained momentum and are now reaching new highs with news that there has been bigger-than-expected job growth in the U.S. These reports have quieted some concerns that "Brexit" could have an economic impact here.  

With Britain's referendum to leave the EU passing, many economists worried how the change would effect the global economy. While European shares still seem to be slipping, according to Reuters, the U.S. remains largely unaffected.

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"The impact on the American economy is probably going to be pretty small,” Chief Economist David Berson predicted to Fox Business before the "Brexit" vote. “In the short run, financial markets could panic simply because it’s not happened before and so we could see a flight to safety. For the real economy, what it means for jobs and income, I think it’s going to be very small here.”

Berson's predictions seemed to be largely correct, with the S&P 500 actually increasing more than 16 percent since its low closing back in February. USA Today reports that American stocks have overcome all worries about a possible slowdown from volatile oil prices and the U.K.'s decision to leave the European Union, which many have claimed would lead to global financial uncertainty and possible economic disaster.

"So far 2016 is reminiscent of past stealth bull markets, climbing a wall of worry despite obstacles in its way," said Douglas Cote, chief market strategist at Voya Investment Management, according to USA Today. 

European shares have dipped after four days of gains, according to Reuters, but it is too early to tell how "Brexit" will affect the European market in the long term. 

Sources: Reuters, USA Today, Fox Business / Photo credit: Kevin Hutchinson/Flickr

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