Typically, you’d expect that when the stock market gets good news, it would reward investors by going up. Unfortunately, kneejerk reactions to good news don’t always last very long. That’s what happened today, when positive news on the employment front led to a rally early in the day. Between upward revisions of past-month figures, and encouraging signs of workers reentering the labor force, the optimism was understandable. Yet, later in the day, the broad market gave up all those gains, to finish somewhat lower, and the Dow Jones Industrials (INDEX: ^DJI ) gained 35 points, but finished well off its highs from earlier in the session as investors turned their attention to the coming week. The S&P 500 and Nasdaq Composite both lost ground on the day, with the Nasdaq, in particular, dropping almost half a percent.
One thing that’s making investors nervous about the future is the onset of the fourth-quarter earnings season, with Dow components Alcoa (NYSE: AA ) and JPMorgan Chase (NYSE: JPM ) set to report next week. With Alcoa, expectations are very low, with the aluminum producer expected to remain only barely in the black, as it continues to struggle with adverse economic conditions in its key markets, along with competition from foreign producers. For JPMorgan, on the other hand, analysts believe the bank will bounce back from the second quarter’s year-over-year drop in earnings per share to post a 19% EPS jump for the third quarter. As the company puts its London Whale trading scandal behind it, JPMorgan is aiming to make the most of low interest rates as long as it can, especially since improving economic data suggests that they might not stay low as long as many believe.
The upcoming election is also a big source of uncertainty for the market. As big drops of nearly 2% for UnitedHealth Group (NYSE: UNH ) , and 1.5% for Bank of America (NYSE: BAC ) clearly show, a lot is riding on the outcome of Presidential and Congressional races. The fate of Obamacare hangs in the balance, as UnitedHealth faces two very different futures depending on who wins in November, while B of A, and its banking peers, could see huge changes in the regulatory climate depending on which party controls the federal government in 2013 and beyond.
Good news may not always lift the markets on any given day, but over the long haul, stocks tend to track the economy pretty closely. That’s especially true of financial stocks like Bank of America, because they have the most opportunities to profit when their customers are prospering, as well. Find out about the banking behemoth's best chances for future success in the Fool’s premium report on Bank of America. It can be yours with a free year’s worth of updates, but only if you click here and get started today.