Why did the DOW go up on bad news?

[TonyMontana]

Since I'm in an inquisitive mood this evening...

Jobs were lost, and even when jobs are created it's not enough to actually catch up with unemployment. So why is the DOW over 11,000 again? I know the economy is recovering and the recession is over, but I don't understand why stocks seem to go up on what sounds to me like not so great news.

Then again, there are days where the news is fantastic and the market sells off. What the hell?

[ThomWV]

1. Many investments are made on considerations other than the daily news.

[spanone]

2. it wasn't bad news. it was pretty much what wall street was expecting.

[regnaD kciN]

14. Actually, the projections were for the rate to go up to 9.7%...

...so staying the same is "good news" (although it probably just means discouraged job-seekers weren't motivated to get out and start looking for work again).

[onethatcares]

3. because monday is Christopher Columbus day and

the banksters needed a bit more money to make it through the long weekend.

[tularetom]

4. Higher unemployment = less money paid in wages and salaries

Less money paid out = higher profits for owners and stockholders.

Higher profits is good news for the market.

Dow goes up.

The market can't see past the end of its nose. If everyone was unemployed the Dow would probably hit 50,000. Of course nobody would be buying anything but that apparently doesn't matter to the country's financial geniuses.

[annabanana]

7. Exactly.. the dow OFTEN goes up on bad employment numbers

They're just not that into us down here in the workforce.....

[Pirate Smile]

5. Bad news to Wall Street means the Fed will probably do more to stimulate the economy which Wall

Street likes.

The reverse - which drives me completely nuts - is when unemployment goes down so the Stock Market sells off - that is because they think the Fed will raise interest rates which they don't like.

Good news for Main Street often gets treated like bad news for Wall Street.

The current Great Recession is one of the few times lately I've seen Wall Street actually realize that they need unemployment to go down.



U.S. stocks rally; Dow closes above 11,000
Investors bid up stocks as Fed seen acting to boost economy

NEW YORK (MarketWatch) -- U.S. stocks ended firmly higher on Friday, with the Dow industrials ending above 11,000 for the first time in five months, after a worse-than-expected jobs report lifted expectations the Federal Reserve will soon boost monetary stimulus.

http://www.marketwatch.com/story/us-stocks-struggle-after-jobs-report-2010-10-08?dist=afterbell


If you are interested in economic news/analysis - check out this blog http://bonddad.blogspot.com/

[Kalyke]

6. Investors make money when jobs are shipped overseas.

American employment up - DOW down. American employment down - DOW up.

[bluestateguy]

8. They seem to want more quantitative easing

And today's report increases those prospects.

[katanalori]

18. Correct.

"On November 3 — unless blocked — Mr. Bernanke and a small, brave band near him will announce QE2: the intention to invent and disburse enough cash to counteract velocity and deflation here, and enough to force the other central banks to follow, or suffer their own consequences.

Mr. Bernanke has the votes and the courage to proceed, but risks an open revolt at the Fed, and opposition from House Republicans, soon to be more numerous. Hope first that he and his noble few find enough support, and then that QE2 works. Hope hard."

http://pmglending.com/loubarnes/credit-news/

[marmar]

9. Because there's speculation the Fed will flood the market with more funny money......

nt

[SlipperySlope]

10. It was really quite simple; bad economy = good for Wall Street.

I can tell you exactly what went through wall street's collective head today.

First, you need the backdrop that the Federal reserve has been hinting for over a month that they are *thinking* about printing up a few trillion dollars and giving that money to the banks. The Fed is going to announce their official intentions on November 3rd (the day after election day).

The economic news today was bad. Much worse than expected. Nothing to celebrate at all.

Except...

Wall Street sees the bad news and thinks "See! Things are so bad that now the Fed will *have* to print those trillions of dollars and give them to us!"

And so, the stock market goes up. And the dollar goes down.

I shit you not.

[Ruby the Liberal]

11. It isn't about good or bad news, it is about expectation vs surprise

The markets form expectations and pricing trades based on that. If expectations are equal to or better than reality, the market trades up.

This is why a stock will tank in price if the company reports a profit, but it is less than expected.

[MadHound]

12. High unemployment equals cheap labor equals more profits,

Happens almost every time unemployment goes up or a mass layoff is announced.

[CommonSensePLZ]

13. +1 nt

[JackRiddler]

15. Because they figure it means interest rates will be held low (near zero)

Cheap borrowing for leverage to play on the market. The market has to beat interest rates to go up.

[rucky]

16. Jobs cut into profits.

Is the thinking over the last few quarters.

[katanalori]

17. Because

The Fed is going to go all in with QE-2 (quanitative easing, part 2) and this will flood the markets with fresh, new cash.

The cash will find it's way into the stock market and other commodities. BUT, the Fed feels it is necessary to do something - ANYTHING, in an attempt to increase the velocity of spending into the real economy.

The Fed must act because the Congress is politically frozen, and unable to do their part to help pull the economy out of the recession.

[TexasObserver]

19. Because private sector jobs ROSE by 64,000 and the FED is poised to act.

Government jobs fell, which resulted in the net loss of jobs for the month.

As revenues to governmental units have fallen due to job losses overall, those units have cut payrolls accordingly. Those jobs will return as private sector jobs return, which create additional revenues to governmental units at all levels.

We would be in better shape if we had passed a strong second stim package of a trillion dollars and not gone for the GOP head fake about the deficit. The deficit be damned until jobs are showing considerably better improvement.

The FED is considering infusing substantial funds into the system, and most believe it will happen immediately following the election next month.

The economy is like a patient that almost died last year, and is undergoing a long, long recovery that isn't always good news.