After all these years, the market's story is still same: It still likes bad news.
There's little else to explain a gain in stocks Friday that came on the heels of yet another disappointing August jobs report. Payrolls grew just 151,000 compared with expectations for 180,000, but that was only half the story. Job quality was weak, salary growth and the workweek eased, and if it wasn't for a government hiring spree, the numbers would have been considerably worse.
Yet the market reaction was predictable to what was an uninspiring report. Stocks rose amid expectations that the job numbers, though a far cry from disastrous, were just weak enough to keep the Fed on the sidelines for a few more months.
"This is probably comforting to the market," said Jeff Kleintop, chief global investment strategist at Charles Schwab. Investors "in the first data readings for September saw a little bit of a weaker start. But it is happier to see the Fed wait just a little longer, with December the most likely place" for the next rate hike.
Trouble is, the bad-news-is-good-news meme was supposed to have expired long ago.
By this time, according to the Fed projections in December, the economy was supposed to be strong enough to be gearing up for its third rate hike this year at the Sept. 20-21 Federal Open Market Committee meeting. Instead, the central bank has yet to follow up on December's quarter-point hike and probably won't do so at the upcoming FOMC gathering.