Have you ever seen the stock market go up when news of unemployment rising breaks?

[GusFring]

Seems odd. I know wall st doesn't reflect main st, but everything is basically shut down right now. Yet the market is in the green.

[Newest Reality]

1. I was wondering about that myself.

Glitch in The Matrix or something?

Did Wall St. do a secret move many miles more away from Main St.? Are they actually trading on the Moon that's to SPACE FORCE?

Why weren't we informed? So, is this sort of a, "Hey, go to hell!"

[The Velveteen Ocelot]

2. It's going to move up and down as long this pandemic lasts.

The market hates uncertainty. For now, more people laid off means fewer employees have to be paid, which is a slight and temporary benefit to the bottom line. I expect more downturns as the epidemic gets worse, and a big recovery when news of an effective vaccine is announced.

[edhopper]

3. The drop yesterday was probably

in reaction to today's expected numbers.
Today is buying opportunity for some.

[FiveGoodMen]

4. Wall Street loves unemployment

It means there will be more desperate job-seekers, willing to work for less.

[rufus dog]

11. Yup

Happens all the time.

[smirkymonkey]

13. Yes, but it also means a lot less people without disposable income going BACK into the economy,

buying all those goods and services that those companies are selling.

Why can't they understand that? They never think very far ahead. It's always about the short-term for them. With tax-cuts, with lay-offs, with everything.

[OAITW r.2.0]

22. Corporations are only concerned with the Micro - their bottom line.

They all compete against each other on the same terms. Never asking the macro-question. Is this a good longterm strategy for staying in business?

The term "outsourcing" became real to me in the early 80's when I was a buyer for a machine tool manufacturer.. A major DC motor manufacturer left New England to build their motors in Mexico. Why I asked the sales guy why, he was honest. The chainsaw wanted lower cost products to supply the customer base. Hence the move to Mexico. I remember thinking, well, that may be great for this company's bottom-line...but what if everyone followed this model? The results of which is playing out on a macro-level here now.

[Takket]

14. Also they take it as a sign

That companies are protecting their bottom line and profits for shareholders instead of dipping into savings to pay workers. This makes Wall Street happy.

[tritsofme]

5. Oil stocks are leading the charge today.

Crude is up 20%+ on news that the Russians and Saudis will considerably cut production.

[3_Limes]

16. This is actually the correct answer.

Saudi Arabia and Russia announced a deal today to work together to stabilize oil prices. More important than oil prices being high or low, stability in oil prices supports equity prices. So large producers working to stabilize prices is a good sign for 'the markets', and pricing changes reflect that.

[Midnight Writer]

38. I also remember when rising fuel prices would wreck the markets.

[Lindsay]

6. Oh, yeah,

the market has historically shown an increase when unemployment increases, I think (I am whatever the opposite of an expert in these matters is, mind you), basically because the corporate bigwigs hate having to pay employees.

Of course, this is an insane record level of unemployment, so who knows?

[kentuck]

7. Gotta put all that money somewhere.

Why not spend it on all these perceived bargains?

[Laelth]

12. That's the ticket, imo. n/t

-Laelth

[uponit7771]

8. The Trend will be down ... there's no reason for DOW to go back to 29 any time soon

[Turbineguy]

9. It used to happen all the time

when CEO's thought that firing their customers was good management and the stock market rewarded them for it.

This was already priced into the stock markets.

What made the number so high is that gig workers can collect unemployment. That's new.

[coti]

10. Yeah, been muttering to myself how I don't get it.

30 or 40 times the normal number of people losing their jobs- to me, that signals a SHITSTORM coming. I have no idea how the Dow doesn't plunge 5,000 points the same day.

[earthside]

15. The stock market is a casino.

Last edited Thu Apr 2, 2020, 03:10 PM - Edit history (1)

Mostly it is traders using other people's money to create some action upon which they can make a profit for the day.

Despite what market analysts may say, they really have no idea why on any particular day the market is up or down -- except on occasions of exceptionally bad or good news ... I'm thinking of 9/11 and Lehman Brothers collapse.

The trend matters only in so far as the stock market is a lagging indicator about where the economy is going.

The market is going down; we're not close to being out of the woods on this.
Watch next week when the unemployment figures have some time to become part of the milieu and the pandemic deepens.
I got 75 percent out of equities after Trump left the Iran deal; if I were still in I'd have sold by now for sure.

[Quemado]

20. Exactly - the stock market is essentially legalized gambling.

That's the way my Economics 101 professor explained it to the class over 40 years ago.

[coti]

24. Of course, you'd think that 6.6 million people losing their jobs in a week would qualify as

"exceptionally bad news"

[earthside]

39. Good point ... go figure.

My hunch is that there is so much turmoil and uncertainty that on any given day's news the gamblers don't know what to do.

We will see how tomorrow's unemployment figures for March are spun. Will it be that we have hit bottom or that these numbers are a harbinger of things to come?

[nevergiveup]

17. This is Wall Street living in denial.

[mathematic]

18. "The market" has known unemployment would be bad for weeks

This is why the market fell long before any unemployment spike happened.

I'll point out that it wasn't just "the market" that knew this but everybody else in america too, including our elected officials, which is why they started talking about a economic stimulus bill weeks ago and passed one last week.

Another phenomenon in the market is that it collectively assesses the probability of events. Here's a simplified example:
Say that the unemployment numbers could only be one of 1 million or 10 million. If half the people thought it would be 1 million and half 10 million, the market would be priced somewhere in the middle. This prediction is like what you hear about when you hear "the market expected it to be X". But this case, the number is obviously wrong. If it could only be 1 or 10, it can't be in the middle. The number comes out as 1 million then all the people that thought it would be 10 million were wrong and the market goes up. Similarly, if it came out as 10 million the market would go down.

So when you hear some "bad" news and the market goes up, it's quite likely that most people in the market already anticipated even worse news and now have to adjust their prices up.

And sometimes the market is just reacting to some other news that you're not looking at. Like when some bad economic news comes out like high unemployment but then the Fed announces that it's going to do something about the recession. Yeah, the unemployment is bad but, long term, it's good that the Fed is going to act to lessen the recession.

[ibegurpard]

19. Yes

I remember noticing it with incredulity back in the early 90s.

[jayfish]

27. It's Pretty Normal.

Less payroll=more $$.

[jimlup]

21. I have seen this many times....

They seem to like it when unemployment is high. Seriously, in my life I have seen it many many times that the market goes up when things go badly for the workers. I don't understand why exactly but I doubt it is conscious. I think instead it is just how the system works. Maybe it means the bosses don't have to pay and have more liquidity to do what they want.

[blitzen]

23. The market gurus already anticipated this...Dow is a leading indicator mostly n/t

[UpInArms]

25. Only when the Fed injects copious amounts of "liquidity"

[LiberalArkie]

26. It generally has since the Reagan era. The market sees it as the corporation has less cash

flow to employees. Thus more profit. It also happens when a company has a layoff.

When I was growing uo the last thing a company wanted to do was have a layoff as it indicated that the company wasn't doing well.

[coti]

29. Yeah, it really demonstrates well the absurdity of "trickle down" and how twisted things

have become.

[LiberalArkie]

34. I remember back in the 80's out on a telephone job at a motel and in the area where I

was working they had on the Financial News Network. Some big wheel CEO was on and he was demonstrating something new called a spreadsheet. What caught me was him selecting the column called "Payroll" and typing in a zero and how the profits and dividends etc really improved. He also was talking about how raising the executive compensation allowed companies to hire the best people and really improve the bottom line.

[Hoyt]

28. Lots of factors impact market. But it could be they were expecting 10 Million new UE claims, but

only got 6 Million.

Plus, the market is hardly in the green -- it's still down 25% from a month or so ago.

Investors may be feeling some relief thinking the stimulus will help bolster the economy, increased unemployment payments will help, companies announcing possible vaccines and treatments, lower than expected death rates, etc. Of course, tomorrow, investors might run for the exits if it appears we'll be in lockdown longer than predicted today, a failure in a vaccine trial, bigger earnings loses than expected, etc.

[captain queeg]

30. Yes it often does, I've never understood it.

I figured companies are rewarded for cutting “overhead”.

[elias7]

31. Look at the past month...

Every big gap down day is followed by a day that seems up, but actually it closes lower than the high of the previous day. Then the fall resumes...

[Wounded Bear]

32. Yes, many times over the years...

In fact, it seems like a 'normal' response.

[2naSalit]

33. OIL... Saudis and US and pooty got together and are in the process of making a "deal".

Since our economy runs on oil, that would explain the bump.

[ProfessorGAC]

35. It's Only Up 0.88%

That's noise in the system. It's still down 28% from where it was a month or so ago.
I wouldn't spend too much time analyzing a blip.
There are bargain hunters galore out there right now.
Let me give you one example.
Company from which I retired had stock at $93.70. When everything went south, price dropped to $78.75 in 2 days. Since then it's back up to $87.60.
Guess what there 5th largest product line is.,................
The active ingredient in hard surface disinfectant cleaners.
Bargain hunters snapped up <$79 stock knowing those revenues & associated profits would increase with the high demand.
The analysts probably figure it'll rise above $90 again and the profit $12 or more than 15% in weeks, not years.
Don't know if they'll be right, but this kind of stuff happens on the market all the time.

[trackfan]

36. Yes, more often than not. n/t

[Crazyleftie]

37. computerized algorithims

seize on minimum upticks inflate the market.and then sell before it crashes again...expect this up and down cycle until the real bottom hits...