The stock market finished solidly higher in a
volatile week, pulling off a sharp recovery Friday from Thursday’s 1% drop. The
gyrations are making it harder and harder to anticipate how the market will
react to what is ostensibly good or bad news.

The downdraft was caused by a surprise move by the
European Central Bank to cut interest rates, and news that U.S. gross domestic
product grew 2.8% in the third quarter, much higher than expected.

Confused yet? There’s more.

While an ECB rate cut might have been expected to
buoy equity investors, the market took it badly, as an indication that European
economic growth—thought to be recovering, albeit slowly—isn’t improving.

Better U.S. GDP growth, therefore, ought to be good
for stocks—except that investors fear it will prompt the Federal Reserve to
begin tapering its monthly $85 billion worth of bond buying, an easing policy
that has fueled the stock rally.

Friday the market head-faked one way and then
finished another. The Labor Department released data showing payrolls rose by
204,000 last month, far higher than the consensus of 120,000. Stocks appeared
headed lower early Friday on fears that the better jobs news, too, would bring
on Fed tapering next month, said Kim Forrest, a senior equity analyst at Fort
Pitt Capital Group,

Then investors parsed the data more closely, she
said, finding that the jobs created were of a low-quality, part-time nature,
and that folks were still dropping out of the labor force. So maybe the Fed
won’t taper next month, investors figured, sending the Dow Jones Industrial
Average to a new record high.

These frequent turnabouts suggest, says Forrest,
that “Mr. Market seems to have ADHD,” or attention deficit
hyperactivity disorder.

The Dow rose 1% on the week, or 146 points, to
15,761.78, and the Standard & Poor’s 500 index headed up 9, to 1770.61.
Bucking the trend was the Nasdaq Composite index, little changed at 3919.23.

The volatility last week doesn’t bode well for the
short term. The momentum behind the market’s lunges is strong. Whatever
happened to the day when good news was good and bad news was bad? (Source:  Barrons Online)