REASONS FOR THE GROWTH OF THE US STOCK MARKET DURING THE CRISIS

Abstract

This paper examines the reasons for the growth of the U.S. stock market in the context of the overvaluation of companies shares. Analysis of the S&P 500 Index's fair value assessment parameters shows an overestimation of the stock market's value. To understand the mechanism of asset price growth, three main indicators of market structure were considered - liquidity, volatility and market depth. Analysis of these indicators has led to an understanding of the processes that affect the value of financial sector assets. The growth of margin debt and the increase in the volume of call options trading in conjunction with the prevailing market conditions contribute to an increase of the U.S. stock market indices capitalization. To understand the systemic risks that can result from such a structure, the graph shows the correlation of indicators that show a direct correlation between volatility, liquidity, and market depth. First of all, the underestimation of systemic risks is due to the current Fed monetary policy. Most market participants rely on the alleged retaliatory action of regulators, which will be implemented immediately in case of emergencies. The problem described in this paper is one of understanding systemic risks, which can undermine the stability of the financial sector if they arise.