Transcripts

Commentary: Examining The See-Saw That Is The Stock Market

SUSIE GHARIB: Now if you`ve ever wondered why the stock markets seem to be going up and down with no rational explanation, you`re not alone. Tonight`s commentator has been wondering that, too. Here`s Allan Sloan, Wall Street editor of "Newsweek" magazine.

ALLAN SLOAN, WALL STREET EDITOR, NEWSWEEK: The stock market lives in a world of its own. It`s a world in which every move has a supposedly rational explanation. The fact that the explanation might or might not make any economic or logical sense doesn`t really matter. One day, oil prices go up and that`s why stocks went down. The next day, oil prices go up again, but stocks go up. When new jobs numbers come in high, stocks can rise because a strong economy is good for the market. When the jobs number is low, that can raise the market, too, because it means the Fed might not raise short-term interest rates.

The fact that a weak economy might also mean weak profits and weak consumer spending? Well, let`s not bother with that. Until about a month ago, almost everything, from inflation numbers to the phases of the moon to the Fed, was a reason for stocks to rise. Now, for the most part, they`re reasons for stocks to fall. Go figure. Let me tell you a dirty little secret. In the long run, the stock market is rational. But in the short term, the market is -- the market. It can rise or fall on any given day because of big investors doing index arbitrage or other random, fluky things. So worry about the long-term, not the short term, and take the daily explanations with a grain of salt or better yet, a 100-pound bag of it. I`m Allan Sloan.