Today's Outrage: Fickle Investors Jeer & Cheer Job Losses
Today we'll see just how fickle investors are about job losses.
On Monday, we saw investors reward
American Express (AXP) - Get Report
for slashing jobs. AmEx shares surged 7.8% that day.
HP
(HPQ) - Get Report
said Tuesday that it would
and the company's shares jumped 2.4%.
Today, however, the overall
market is poised to open lower
because of the unemployment report showing new jobless claims jumped by 637,000.
Nevermind that included inside that data are the job cuts that were cheered at companies from banks such as
Bank of America
(BAC) - Get Report
and
Citigroup
(C) - Get Report
to technology companies such as
Microsoft
(MSFT) - Get Report
and
Apple
(AAPL) - Get Report
to retailers like
Abercrombie & Fitch
(ANF) - Get Report
as well as manufacturers like
General Electric
(GE) - Get Report
.
Yes, investors want to have it both ways. They want to see individual companies doing whatever it takes to shore up the bottom line and increase the return on investment. At the same time, investors hate to see signs that the overall economy is suffering.
Intrinsically, investors know that job losses are never a good solution. A company that is focused on saving its way to higher profitability is not a growth stock.
For companies, pink slips are the easy way out. It's much easier and quicker to cut the headcount than to tackle other more entrenched efficiency problems.
This is the vicious cycle that we are in. Companies cut jobs to save themselves, hurting the overall economy -- and ultimately themselves -- in the process. All the unemployed folks stop spending, causing other companies to scale back investments and slowing the economy further. It trickles down from big companies to their suppliers. It moves horizontally across the economy from consumer-focused companies to wholesalers to manufacturers.
The market cheers and jeers the job cuts along the way, rising and falling with the micro and macro economic indicators.
When jobs are being created again, I hope investors reward the companies that make the bold decision to grow their workforce.
In the meantime, get ready for the downside today as investors digest the unemployment numbers.
Maybe tomorrow another company will fire some more people and the market will gain again.
Hall is the editor of
TheStreet.com
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
Bloomberg News
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
The Journal-Gazette
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
,
The New York Times
and
International Herald Tribune
. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.
