Good News Bears

The good news is that the S&P 500 rose 1.5% this past week. The bad news is that it gave back almost all of the rally that occurred during the first two days of the week and is only 1.5% above the bear market's low of last Friday.

This week showed that bad (good) economic news is good (bad) for the stock market. Monday and Tuesday's rally was fueled by relatively weak economic reports on Monday (M-PMI) and Tuesday (JOLTS). But then several Fed officials insisted that inflation is too high and will require more rate hikes from the Fed. On Thursday, Fed Governor Christopher Waller concluded his speech with the Fed's party line: "The focus of monetary policy needs to be fighting inflation." The index gave back 2.8% on Friday alone following a relatively strong September jobs report.