Yesterday and today we were presenting with more terrible unemployment numbers. Worse then expected by most experts in fact. US Initial Jobless Claims Rose by 12000 to 669000 last month, while people continue to get laid off while companies cut back their expenses on lessening demand for their products and services.
Why Is the Stock Market Up Then?
Despite these terrible numbers, the stock market has been up close to 5% in the last 2 days alone. Kind of ironic huh? The reason the jobs data is not affecting the stock market in a negative sense is because traders and investors have already likely priced in the expect loss of jobs. They know that the unemployment rate is a lagging indicator in the economy. This means that the Stock market, as well as economic demand will rise before the unemployment rate begins to lower and new job opportunities present themselves.
Some Good News:
The market is also being propelled by some rather optimistic news. Pending home sales were up, and the manufacturing index was not as bad as most experts thought it would be. This along with the expectations that mark-to-market accounting rules were going to be changed today has propelled especially the Banking and financial stocks.
Overall, I have a good feeling about the market. Stocks should probably settle in the 7,900-8,400 range for a while, creating a new base for a run up to higher territory in May and June.
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