system
Given the following post, respond as if you're commenting on Reddit:
human
If corporate profits are at a all time high. Than why is the stock market plunging?

Isn’t the stock market mostly an indicator of how well corporations are doing? If they are doing well than why is the stock market falling at unprecedented rates?
gpt
Markets are forward looking. Investors and speculators see that things will be worse in the future. That affects corporate profits now.

Remember that companies borrow a lot. They also often borrow at variable interest rates. As a result, their borrowing cost will rise significantly. Bank borrow and lend. In the US however, they usually lend at fixed interest rates for home loans. So, the mortgage payments banks are getting are falling in value due to inflation, but banks can't compensate by increasing interest rates.

Then there's leverage. Many investors use leverage to obtain higher returns. Those loans are also variable rate. They have become sharply more expensive because of the Fed interest rate rises.

Lastly, there's bonds which are an alternative to shares. The rate rises have made bonds much more attractive. 15 year US government bonds yield nearly 4%. Compare that to the shares of a company that gives no growth, those may also yield 4%. So, why buy a share - which comes with risk - when you can buy the bond?