Just when the stock market seems like it’s starting to make sense, it has to go and unleash its inner Talking Heads.
We’re referring, of course, to Friday’s payrolls report, which was a massive disappointment. All week long, the
Dow Jones Industrial Average
had been outperforming the
That suggested that investors had finally gotten behind the notion that the economy really is booming and were ready to reward value stocks, the market’s cheapest and the biggest beneficiary of that growth.
Then the jobs report hit. Just 266,000 jobs were added in April, well below economist forecasts for about a million, making it the biggest miss on record. What’s more, March’s number was reduced to 770,000 from 916,000. If the numbers are right, they suggest the U.S. economy isn’t nearly as strong as many observers suspect it is.
That was the bond market’s first reaction. The 10-year Treasury note yield fell to around 1.485%, a nearly 0.1 percentage point decline from where it had been trading. Futures on the Dow, the most economically sensitive major benchmark, slipped into the red, and Nasdaq futures were pointing to a gain of more than 1%, which made sense given it’s the least dependent on the economy for gains.
But then, soon after the market opened, the 10-year yield was close to unchanged on the day, while the Dow had gained 229.23 points, a sign that the market, at least, didn’t believe that the economy was stagnating the way the payrolls number suggested. By day’s end, the Nasdaq was up 0.9%, suggesting a lack of excitement following the early, knee-jerk reaction.
That continued a trend that had been going on all week: Nasdaq strength was used as a selling opportunity. And by the end of the week, it was impossible to disguise how badly growth stocks—those whose growth is expected to outpace the market’s—had performed. The Nasdaq fell 1.5% to 13,752.24, while the
Invesco S&P 500 Pure Growth
exchange-traded fund (ticker: RPG) fell 1.5% to $170.02. But for a real sense of the damage, look no further than the
ETF (ARKK)—home to richly valued speculative stocks like
Go to the news source: Why the Stock Market Rose This Past Week. What to Know.