Stock Market and Good Finance News

In an attempt to explain why the stockmarket often goes down when good economic news is released, a Motley Fool writer points to Ben Bernanke and interest rates. The article is worth a read for those interested in a simple explanation of the ups and downs of the seemingly irrational financial markets..
Explaining Stock Market Gyrations
"When positive economic news is released, such as lower unemployment figures, rising wages, or growing national productivity, the specter of possible inflation comes out to haunt the market. Economies growing too quickly can spur inflation, with too much currency in the marketplace leading to the weakening of the dollar and rising prices.
To stem inflation, the Fed notches up interest rates to decrease the amount of borrowing and slow down the economy. Rising interest rates renders bonds more attractive, because they offer fixed incomes. Investors pull money back from stocks, which are hit doubly with the threat of shrinking corporate earnings and with the attractiveness of growing bond yields." MSNBC

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