The stock market has dropped 250 points so far today, and traders are mystified as to why.
A broad sell-off sent the Dow Jones industrial average more than 290 points in afternoon trading, hours after the government reported that the number of Americans filing for unemployment benefits unexpectedly rose last week.
But the sharpest declines came nearly two hours after that report was released, a lag that rarely occurs in today’s overheated financial world. The other financial news of the day, including a $2.50 drop in the price of oil, would usually cheer investors. So what gives?
Could it be that enough of them were spooked by the prospect of Vice President Sarah Palin? If this is another example of a Palin bounce it is of the dead cat variety, 'dead cat bounce' being the term traders use for a momentary uptick of false enthusiasm before the market plunges even further into the red.
It would not be the first time that the pontifications of an anti-science, anti- stem cell research politician had a chilling effect on the stock market. If you recall, when the tech boom was wobbly in the early months of the Bush presidency W. himself thought a few encouraging public words would cheer the market back into positive territory. Unfortunately for the market, every time Bush opened his mouth the market reacted in the opposite direction.
Since President Bush came to Wall Street on July 9 to reassure Americans that corporate malfeasance would be taken seriously, the Dow has fallen 13.5 percent and the Nasdaq composite index 6.2 percent.
Traders know what ideas are bad for the economy, and they got a whiff of a whole bunch of them in the foul wind blowing out of St. Paul last night. That's not the real news though; the real news is that, if my theory is true, Sarah Palin impressed them enough that they actually started to envision a McCain/Palin administration for the very first time. And it was not pretty.