Making Sense of Market Moves

Not to jinx anything, but we appear to be enjoying a little stock market rally this week.

The nation’s major indices – the NASDAQ, Standard & Poor’s 500 and the Dow Jones Industrial Average – each closed up at about 6 percent week-to-date Wednesday.

Decent earnings reports, a slowdown in reported credit card delinquencies, a weaker U.S. dollar (which is a good thing; one of these days I’ll tell you why) and an upbeat Fed report all have pushed traders into a bullish mood. We’re not at a year-to-date high by any means – that happened back in January, on the Dow – but the trend is noteworthy.

If the bounce extends through the end of the week, you might want to consider a markets story. Readers who’ve been stuffing their unopened investment statements under the sofa cushions all year likely will have caught wind of the market uptick and expect local business coverage to reflect it in some way.

The trick: How to make sense of stock index moves when you’re not a market maven who does it for a full-time living. How can you add value beyond replicating a wire story?

Report the share prices of companies headquartered in your area, along with earnings they’ve recently issued, or other context about their business and industry. If you aren’t sure which local firms shares are traded, consult a local business journal; they often publish annual directories. Use corporate Web sites to get historical stock prices and other data for your charts.

Don’t overlook major local employers even if their administrative offices are elsewhere. Boeing Co., for example, moved its headquarters to Chicago in 2001 but you can bet its share performance still is of interest to thousands of workers and retirees in the Seattle area.

For market overviews and practical tips for investors, seek out economists at local universities and business schools. Beware of commentary from experts in commissioned sales-oriented jobs at banks, brokerages and insurance firms unless you’ve checked out the individual’s credentials and reputation. That isn’t to say all such people will produce nothing but self-serving quotes, but the scope for bias is great, as it is with representatives of most industries. If you want remarks from financial advisers, locate some fee-only Certified Financial Planner professionals; you may do a ZIP-code search for those in your area at the CFP Board of Standards site.

Another touchy area: It’s OK to acknowledge significant stock market fluctuations – but for most individuals, investing is a very long-term proposition. As far as I’m concerned, it’s unethical to hype short-term gains and losses with big headlines, dramatic pull quotes and other eye-catching devices, thereby training your readers to overreact to ordinary volatility. Financial message boards are rife with poignant posts from spooked investors who locked in losses at the bottom and are, inexplicably, waiting until markets climb before they buy in again. Be sure your coverage and its presentation are balanced and informative, not sensational.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.