Last Friday, the Bureau of Labor Statistics released, as usual, its monthly employment report for April. The numbers were good, but not surprisingly so. The Employment Situation said the economy added 223,000 new positions in April– +213,000 in the private sector and +10,000 in government.
The revisions to prior months’ data were strongly negative, though–+2,000 jobs for February and -41,000 for an already weak March.
Wage gains remained in the +2%/year range; the unemployment rate was stable at 5.4%.
My reaction was that the figures were about what the market had expected. The headline figure, ex revisions, was exactly in line with economists’ estimates. Nothing else changed much.
…the S&P rose steadily during the day end ended up by 1.3%.
Yea, I’ve been retired for some time. But I can’t imagine any of the portfolio managers I knew/know buying stocks on this report (because it contained no new information).
Yet the market didn’t just shrug the report off. Instead, it went up a lot. Assuming the market went up on the Employment Situation–and I think it did–the market reacted to a just-as-expected report rather than discounting it in advance, as usually happens.
Why did the market behave this way? I don’t know. All I can come up with is that computers, not people, are the main actors, and that the decision rules they’re using aren’t very good.
Something to think about …and keep an eye on, since this behavior runs so counter to prior experience.