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Market Synchronicity

By Jon S. Strebler

 

The stock market isn’t always in sync with the economy, due to its role as a forecaster of things to come. Savvy investors don’t buy a stock so much because its underlying company is doing well today; they buy it because they expect the company to do better a year or two down the road. And vice versa. Thus, we get the fairly common phenomenon of stocks “inexplicably” heading up when the economy is a disaster, or dropping when things are going well. Is this an example of one of those latter situations?

 

Last week’s unemployment data confirmed that the economy is “nearing full health,” with employers “confident the economy will continue to expand,” according to the Associated Press. Automobiles and homes, two huge drivers of our economy, are selling briskly. Yet stock prices dropped both Thursday and Friday, ostensibly out of concern that the Fed will raise interest ... Log in or subscribe to continue reading.


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