Stocks rally, erase day's losses
UPDATED at 3:43 p.m.
Stocks are staging a dramatic turnaround as the closing bell approaches, erasing almost all of the day's losses.
With about 15 minutes to go on the trading day, the Dow is approaching flat after being down by as much as 160 points at one point today.
The broader S&P 500 is up two-tenths of 1 percent and the tech-heavy Nasdaq is up six-tenths of 1 percent.
Even after Thursday's big sell-off, stocks are moving toward flat for the week.
The rally is probably attributable to short-sellers buying stocks in order to cover their positions rather than a response to this morning's decline in the U.S. unemployment rate, which traders saw through as being less optimistic than it was portrayed by the White House.
Stocks mixed at opening
10 a.m.: Stocks are mixed at opening following yesterday's big sell-off and this morning's surprising drop in the unemployment rate from 10 percent to 9.7 percent.
In the first 20 minutes of trading, the Dow is down one-tenth of 1 percent.
The broader S&P 500 is just above water and the tech-heavy Nasdaq is up less than one-tenth of 1 percent.
People should not get too happy about the drop in the unemployment rate because at first glance, it doesn't look that encouraging. Here's why: Even though the rate dropped from 10 percent to 9.7 percent, 20,000 jobs were actually cut from payrolls in January. Forecasters expected employers to actually add 5,000 jobs to payrolls -- the first gain in months. So why did the rate drop? Because more workers checked out of the workforce. In other words, they became so discouraged, they gave up looking for work. This means the overall labor pool shrinks, which drives down the rate.
I'll unpack this math a little more later today.
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February 5, 2010; 3:43 PM ET
Categories: The Ticker , Unemployment , Wall Street | Tags: Dow Jones, nasdaq, s&p 500, unemployment
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