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The Tell: ‘Bad news is good news’ for the stock market right now — here’s how that could end

Investors treating bad news like good news—and vice versa—is the narrative shorthand of the moment when it comes to explaining daily stock-market moves, but the looming second-quarter U.S. earnings reporting season could soon change the equation, one analyst warned Tuesday.

The good-news-is-bad-news version of the phenomenon was on display last Friday after a stronger-than-expected U.S. June jobs report triggered a modest stock-market pullback as investors scaled back the scope of expected interest-rate cuts by the Federal Reserve.

Ahead of the data, investors had pushed all three major U.S. stock indexes — the S&P 500 SPX, +0.00% the Dow Jones Industrial DJIA, -0.21% and the Nasdaq Composite COMP, +0.43% — to record finishes last Wednesday, with buying enthusiasm attributed to enthusiasm for aggressive Fed monetary easing after recent weak economic data.

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