Awful jobs data sends US stocks to new records
Markets are back to interpreting bad news as good, and good news as bad.
With expectations that the Federal Reserve won't begin tapering pushed back until sometime in 2014, traders expect that poor economic news will keep Fed policy loose for longer – which is positive for equities.
So really bad labour market data is expected to push tapering further away, and financial markets love it. Now the S&P 500 has seen new record highs.
Terrible, awful jobs report shows slow death of American dream, last days of civilization. In other news, S&P 500 breaks 1,750.
— Eddy Elfenbein (@EddyElfenbein) October 22, 2013
That's all because of the government shutdown at the start of the month. The Fed is expected to offset the economic damage that resulted with continued monetary activism.
80 per cent of S&P 500 stocks are up by at least 10 per cent this year, with the index on track for its best year since 2009 (in which it grew by 23 per cent).
In September Federal Reserve chairman Ben Bernanke said before the shutdown that "the extent of restrictive fiscal policies remains unclear, and upcoming fiscal debates may involve additional risks to financial markets and the broader economy."