Market Up On Interpreted News

The stock market is in the process of ending the recent rout with a four hundred point gain in the Dow as of the writing of this post. It seems that its not the actual content of the news but the way that people and computers choose to interpret the messages.

First, we have the idea that “trade tensions have eased” based on remarks out of China. The actual language was that the tensions between the U.S. “should be resolved through dialogue and negotiations”. I suspect that there is a computer algo out there that is picking up any non-negative headlines about China and pushing the “Buy” button. I guess what they said about dialogue is better than any notion that the trade war would evolve into an actual war.

Secondly, the Federal Reserve chairman commented that
“As always, we will act as appropriate to sustain the expansion.” I don’t see the market moving sentiment there. Am I missing something? Given the move in the market, you would think that he said that the Fed was willing to backstop the market, again!

We will see if the markets hold their gains and if they carry through to tomorrows session but, given all of the damage done over the post week, there could be some short covering responsible for the run up.