Finance: Pay no attention to financial writers

This is stock market "current news" panel from Yahoo Finance. Read the headline and lead paragraph on the right. They suggest the market really took off this morning. Now take a look at the chart on the left, showing the NASDAQ down a couple of points. Then check out the numbers below the chart, showing the NASDAQ up a tiny fraction.

These three things should all say the same thing. They don't.

Next, consider the substance of the piece. "Fed Speculation Fuels Wall St Buying" and words like "fuels" and "rally" combine to suggest a big "up" day for stocks. But that's not what was happening at all, as the numbers show.

Investors weren't actually "buying" (a euphemism for a rising market), but let's say they were. Could "Fed speculation" cause that? Would millions of individual investors take a look at the morning's news from the Fed and simultaneously think "Aha! The Fed may stop raising interest rates soon! This morning, I shall buy some shares for a tiny fraction more than they were priced at yesterday's close!"

I doubt the AP's business desk knows that happened. I doubt that's what would have happened, even if the numbers had been up dramatically.

Here are the facts: index futures - which are options on the markets themselves and which trade when the markets are closed - were up, perhaps on Fed news, prior to the market open this morning. Some overseas exchanges closed with decent gains, too. But the "up" had faded by the time this AP story was written. Unfortunately some residual, stale "facts" remained in the process that converts information to news and were sucked into this report.

In other words, the Associated Press writer performed a sort of averaging of facts to come up with this story:

Current report:"Markets up on Fed news" X Current reality:"Markets flat or down"
   = Reported:"Markets rise modestly"

These baseball-game-style reports are only really accurate when something dramatic happens, along the lines of "Enron files bankruptcy". And when something truly dramatic happens, you don't need the reports to figure out that markets will be affected. Investors who know what they're doing ignore this noise. Those who don't are confused by it. Without doing my research, I'll venture the latter class are much more likely to be found reading Yahoo Finance, and are badly served by this sort of writing.