Opening up my MSN homepage today, I immediately zoned in on the business headlines off on the right hand side, and especially the one that loudly proclaimed: “U.S. economy shrank 6.1 pct in Q1.”
That’s not exactly the best news to start off a trading day with, especially since - while everybody knew the economy would retract - they only thought it would do so by 5%. So I don’t think it irrational that I expected the major indexes to have already fallen by the time I got around to checking them out around an hour ago.
Yet for some largely unknown reason, as I looked at the numbers they showed just the opposite. A healthy-looking Dow had gained 128 points, the Nasdaq was up 30 points and the S&P up 14 points.
An hour later - and contrary to every rational line of thinking I can ponder - it’s 156, 36 and 16 respectively.
Could somebody tell me what’s going on? It isn’t like the other prominent business news out there is all that encouraging…
- 6 Banks failed the Fed’s stress test
- Bank of America’s (NYSE: BAC) CEO is getting grilled
- Textron Inc. (NYSE: TXT) plans to cut 8,200 jobs
Of course good news does exist too. We’re not in a black hole of despair by any means, as General Dynamics (NYSE: GD), Burger King (NYSE: BKC) and Dendreon (Nasdaq: DNDN) all had positive data to report. But while I’m not trying to downplay those reports, when weighed against such a heavy load as a 6.1% decrease in GDP, I just don’t see how they even come close to measuring up.
According to Madlen Read, an AP Business Writer, we can possibly attribute that optimism to high expectations for the upcoming Federal Reserves’ assessment of the economy. That’s supposed to be given later today, so this could be an interesting ride.
For the time being though, keep in mind that this is not a rational market.
- by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research
