Dow Drops 129 Points Because Bad News Really Is Bad News


10:23 a.m. The November jobs report disappointed but whether that’s good news or bad news for the Dow Jones Industrial Average and other stock indexes remains to be seen.

The U.S. created just 155,000 jobs in November, well below expectations for 190,000, and it sure looked like bad news would be good news, earlier today, as the Dow erased a 100-point overnight loss to gain nearly 100 points in early trading. Since then, however, stocks have slipped back into negative territory. The S&P 500 has fallen 0.5% to 2681.37, while the Dow Jones Industrial Average has declined 129.22 points, or 0.5%, to 24,818.45. The Nasdaq Composite has dropped 0.9% to 7127.50.

The quick decline is being blamed on headlines reporting that Peter Navarro said the U.S. would continue raising tariffs if no agreement with China was reached in 90 days. Still, that’s not exactly new news; we see it as more of a reminder about what’s at stake.

The whole return of the bad news-is-good news narrative, however, struck as a little bit of wishful thinking. The idea was a product of the Financial Crisis, quantitative easing and all the rest, as the market tended to freak out at any sign that the punch bowl would be removed. We had a brief moment during the middle of this year where it looked as if economic growth, Fed rate hikes, and higher markets could coexist.

The first signs of a trade-related slowdown ended that. It would be nice to return to a world where bad news is good news. But it seems we’re long past that point, given that the Fed has already tightened rates, and will continue paring its balance sheet.

So the market continues to weigh in on November’s payrolls report, and as it does so, a disappointment looks like it really is a disappointment.

What the market needs now is some unequivocally good news.

Write to Ben Levisohn at Ben.Levisohn@barrons.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.









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