Comments: Statistics, Jobs, and the Equity Markets

Correct me if I'm wrong, but it isn't unusual for the markets to go down when employment goes up because it means costs of doing business are going up too. It's not unusual to see Wall Street react positively to higher unemployment, at least for a couple of days after the figures are released.

Posted by Ara Rubyan at March 27, 2004 03:52 PM

Ara-

The reason why you see the market react positivly at all when there is a lack of job growth is that it means that the Fed will no be as willing to raise the prime rate when the labor market is weak. For the most part, the speculators price in a certain ammount of jobs into the market and then everyone waits to see if that number is hit. If it is missed by a lot, it is not uncommon to see a rally because that would extend the time before we see a rate hike. If it is matched, the markets usually mulls and often times sells because the positive aspect of job growth is often not enough to drive the purchasing of future earnings. Jobs are good, but unless the new job creating numbers crush The Street's expections, it won't set off a firestorm of purchasing.

The market is a funny place.

Posted by SaWb at March 27, 2004 07:15 PM

SaWb--

Couldn't have said it better myself.

Posted by Benjamin Kepple at March 28, 2004 11:42 AM