Friends
Oh boy, we’re back to bad news is good news again. One might have thought that investors had finally come to the conclusion yesterday, that the economic signals that we have been getting lately indicating a slowing economy was about to take a toll on the stock market. As we pointed out yesterday, ok the economy is struggling so traders decided to sell on the Fed news yesterday, but then what? What are the alternatives? Remember, we’ve been living in a bad news is good news for stocks environment for a long time. Bad economic news means that the Fed remain accommodative. In a zero interest rate environment, stocks become the alternative to bonds. Yes, we did have a nice number on weekly unemployment claims, but most believe that tomorrow’s non-farm payroll number is going to show more weakness.
So of course, stocks bounced right back from yesterday’s drubbing to post gains across the board. The Dow Jones Industrial Average was up 129 points to close at 14,830. The S&P 500 was up 14 points to finish the day at 1597. Gold was up $20 to trade at $1466 per ounce, while oil was up $2.98 to trade at $94.01 per barrel WTI.
The consensus estimate for tomorrow’s non-farm payroll number is 153,000 new jobs to have been created in April. More interesting will be the reaction to the number. Will we rally if it’s bad? We’ll we rally if it’s good? Seems to me we’re still in a bad news is good news environment. Perhaps the number will be just right, not too bad but not too good. Oh brother!
Have a nice evening everyone.
