Dow Shrugs Off Bad News, Jumps Out of Gates
It's hard to imagine Wall Street dealing with more bad news in one morning.
And yet, the markets burst out of the gate, all happy-like.
Earlier this morning, the Labor Department reported that U.S. unemployment jumped higher than expected and Ford posted an operating loss of $3 billion for last quarter. Later this morning, GM is expected announce it is burning through cash at a rate of $1 billion per month.
The theory goes: Wall Street had already baked in all of this bad news over the past two days -- when the Dow lost more than 10 percent. So the Dow dive happened before today's news came out and, now that the news is out, the Dow is going back up.
Yes, we know. It makes perfect sense.
In the first 15 minutes of trading, the Dow is up more than 50 points, or about 0.6 percent.
The S&P 500 is up about 0.4 percent and the Nasdaq is up 0.5 percent.
Moments ago, Ed Lazear, President Bush's top economic adviser, appeared on CNBC and said he saw two good pieces of news in all the bad: Oil prices are low and, even though productivity numbers have slowed, they are still growing. Further, he said, inventories are low, which means that when a recovery comes, manufacturing will have to ramp up.
Lazear cautioned the new administration and Congress against raising taxes, saying the TARP program -- giving money directly to the financial sector -- is the way to save the economy.
"We need to get interest rates down and investment going so wealth increases and people start spending again," Lazear said.
Consumer spending accounts for 70 percent of U.S. GDP.
Finally, if there's one guy who's having a good time in this global recession, it's Herbjorn Hansson, head of Nordic America Tanker Shipping, who just popped up on CNBC and said he's shipping oil all over the world.
Gleefully, he said: "We are making a lot of money!"
-- Frank Ahrens
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