The old Wall Street saw, “Buy on the rumor, sell on the news” was on full display as the Dow dropped 268 points on Thursday. The economy has provided us with some pleasant up side news lately and yesterday was the end of that season.
The news had been great so far in 2010. The fourth quarter showed companies doing robust business and the economy growing more at more than a five percent annual rate. But once companies like Google started reporting hefty year over year advances you knew the air was coming out of the balloon.
To me sure, year over year growth wasn’t hard to come by given how battered the economy was in the forth quarter of 2008, but a win is a win and we all needed to good news.
But now our sights have to be set on another milestone and that would be getting the great American jobs machine cranking again. This, according to the experts will be harder to do because newly profitable companies will want to savor the black ink and ramp up productivity as much as possible before adding jobs. That savoring contributes to the latency we often see at this stage of a recovery. In news just in the government says we lost 20,000 jobs in January.
Right now, the unemployment rate is at 9.7 percent nationally and it is expected to stay there for most of the year. But that could change — we need something, a new rumor, to gain back yesterday’s losses and to add to the growth that started in Q4.