Why do stock prices go down when the jobless rate goes up? - ourluckydime most recent 30 from http://www.ourluckydime.com2010-08-01T04:21:58Zhttp://www.ourluckydime.com/feeds/question/62http://www.creativecommons.org/licenses/by-nc/2.5/rdfhttp://www.ourluckydime.com/questions/62/why-do-stock-prices-go-down-when-the-jobless-rate-goes-upWhy do stock prices go down when the jobless rate goes up?Dan2009-10-02T16:26:07Z2009-10-22T15:39:50Z
<p>With the <a href="http://www.marketwatch.com/story/us-job-losses-accelerate-to-263000-in-september-2009-10-02" rel="nofollow">recent news about joblessness</a> (is that a word?), it seems like markets sank a bit.</p>
<p><strong>Why do stock prices go down when the jobless rate goes up?</strong></p>
http://www.ourluckydime.com/questions/62/why-do-stock-prices-go-down-when-the-jobless-rate-goes-up/63#63Answer by Rob for Why do stock prices go down when the jobless rate goes up?Rob2009-10-02T16:51:27Z2009-10-02T16:51:27Z<p>Fundamentally because the jobless rate is a barometer of the health of the economy, if the jobless rate increases then it's a sign that the economy is deteriorating and so companies are likely to make less profit in the future. Lower future profits means a lower stock price.</p>
<p>However there are instances when the opposite could happen, stocks could rise on a worse jobs number, this is because markets, the stock market included are a discounting mechanism, they take what available information there is before the fact and then discount that in the price. For example the consensus might be that 50,000 jobs will be lost, the market takes that information into account, when the jobs numbers are issued the number is as expected 50,000 that is what everyone was expecting and so the price does not move much, the information was factored in. On the otherhand say the number came in at -25,000 this is better than consensus the stock market would increase because the information that was factored in was incorrect, likewise a -75,000 print would be worse and the market would decline.</p>
http://www.ourluckydime.com/questions/62/why-do-stock-prices-go-down-when-the-jobless-rate-goes-up/136#136Answer by unknown (google) for Why do stock prices go down when the jobless rate goes up?unknown (google)2009-10-22T15:39:50Z2009-10-22T15:39:50Z<p>If jobs are being lost, then companies can't do as much work, so they won't be worth as much.</p>