Chao Deng, in his piece “Memoirs of a Market Reporter,” gets it (mostly) right about analysts/reporters trying to explain the short-term movements in the market:
[The] drudgery of writing the market-close story—stocks up on this; stocks down on that—began to make me wonder whether chasing the inevitable day-to-day ups and downs of markets was worth anyone’s time. Some critics say markets reporters must suffer from A.D.D., because short-term fluctuations in stock indices really don’t matter much in the long run. They say it’s absurd to pin a single narrative on spot news involving countless individual decisions, many of them made by robots. Too often, coverage favors one slant if stocks are up and another if stocks are down when, in fact, nobody really knows.
The depressing part is that markets beg for an explanation, and the public desires one. As if an explanation can assuage our fears:
[A] volatile turn in the markets simply begged for an explanation, sending thousands of extra readers my way.
Here’s the kicker: there is no good explanation for why the markets are down today(a must-read piece by Felix Salmon):
As a general rule, if you see “fears” or “pessimism” in a market-report headline, that’s code for “the market fell and we don’t know why”, or alternatively “the market is volatile and yet we feel the need to impose some spurious causality onto it”.
This kind of thing matters — because when news organizations run enormous headlines about intraday movements in the stock market, that’s likely to panic the population as a whole. They think that they should care about such things because if it wasn’t important, the media wouldn’t be shouting about it so loudly. And they internalize other fallacious bits of journalistic laziness as well: like the idea that the direction of the stock market is a good proxy for the future health of the economy, or the idea that rising stocks are always a good thing and falling stocks are always a bad thing.
Trying to put a reason behind short-term fluctuations is ultimately useless. Remember: you can’t time the market. And don’t believe anyone that tells you they can.