bobmsmythe

Fair enough. Federal reserve interest rate is basically the "base rate" for borrowing money, the rate that the fed charges the banks. For all intents and purposes, it sets the "price of money". When the interest rate is lower (as it is right now), it's supposed to make money cheap, meaning people borrow money and use it to invest. This drives up the stock market and everything else. When the economy is moving well, the fed's fear is inflation, so they boost the rate to increase the cost of money, thereby reducing its supply.

Unemployment numbers affect stock prices in 2 ways, one direct and one indirect. Directly, they're a good gauge of the strength of the economy, especially since consumers (employees) drive much of the GDP. Indirectly, high unemployment drives down the cost of wages, meaning companies can save money on hiring and use it elsewhere. Labor costs are usually the largest cost outlay on the part of corporations.

Housing sales are much the same, though they're *much* more dependent on the fed rate. Right now, the effective cost of housing is probably 5% per year cheaper because the cost of borrowing money is so much lower. Also, housing sales are a good proxy for forward-looking economic strength, because people don't buy houses if they're expecting to lose their jobs next month. If and when the rate goes up (or even *threatens* to go up), mortgage rates do, too, increasing the price of borrowed money and therefore of homes.

Durable goods are similar to houses-- they are exactly what they're called, goods that are expected to last (like cars, furniture, etc) as opposed to food, fuel, etc. People only buy them when they have a reasonable expectation of being able to pay them off. These numbers have been massively skewed of late by defense orders since things like planes are included.

Generally speaking, the way these numbers affect the market can be broken down in two ways:

1) People buy when they have faith in the economy (ie, companies aren't going to fail) or when the Fed cuts rates;
2) People sell when they think the economy is headed to the shitter or when the Fed raises rates.

Of course, it's more complicated because a lot of these things are already "priced in" to some extent-- the correction of the past two weeks has been essentially a pricing in of what looks like a likely Fed rate raise later this year. Ironically, the lousy employment numbers this morning spiked the market up, because they are perceived to lessen the chance of a rate rise.

Finally, "triple witching" simply refers to the day once every three months when index futures, index options, and stock options all expire simultaneously. These days tend to experience a lot of volatitility as people try to get in or out of securities, especially for hedging purposes. Some folks on the street actually call it "quadruple witching" now that they've got single stock futures, LOL. If you don't understand options or futures, I'm happy to explain them.

Bob