Look at that: stocks finished green.
Just like everybody thought.
Shortly after the jobs report was released, the Dow was down about 250 points and eventually closed the day up about 180 points — a 430 point reversal.
In an early email on Friday, Dave Lutz, head of ETF trading at JonesTrading and a friend of program, said, “Right now it looks like I may be crazed, but I’ll tell ya — This market has consistently confounded everyone with how it reacts to headlines. Watch equities close green today…”
Now of course, Lutz would be the first guy to tell you that 1) he wasn’t the only person out there calling for a big reversal and 2) this call mostly comes down to luck.
But we award the point anyway: sticking your neck out there after what seemed like the beginning of a really ugly day in the market gets cull credit and them some.
Of course, the perverse part of why stocks might’ve reversed is that investors are now looking at the economy and taking the “under” — meaning they’re basically betting that no matter how you spin it, the economy is closer to needing more help from the Fed than justifying a rate hike — and betting that more quantitative easing, or QE, is coming before we get a rate hike.
In a note to clients after the jobs report on Friday, Gluskin Sheff’s David Rosenberg said that right now it doesn’t look at all like we’re heading for a rate hike anytime soon, and added that if the economy looks like this in six months, we’ll actually be talking about more QE.
So: bad news is good news. Again.