Huh? Dow up 260?

Of course it makes no sense that stocks take off on the day that saw the worst employment report since at least 1974. Then again, the equity markets are drifting in their own netherworld. "I think we’re just due for bear market rallies," ING investment strategist Brian Gendreau told the NYT. "I don’t know anyone who thinks this is the start of a bull market."

Although the decline in nonfarm payroll jobs announced Friday by the Labor Department was nearly 200,000 more than an expected drop of 335,000, for the worst monthly losses in 34 years, analysts said that many investors had quietly been bracing for starker figures than the consensus projections. “The whisper numbers, we were hearing some 4’s and 5’s out there,” said Philip J. Orlando, chief equity market strategist at Federated Investors. “It’s not as if it were completely out of the realm of possibility.” And analysts said that the markets appeared to anticipate Friday’s bleak data with a late sell-off on Thursday that dragged down the Dow by 215 points.

Here's David Gaffen's take at Marketbeat:

For now the stance of investors can best be described as “watching and waiting,” as the savvy ones dive in during periods of strength and beat a hasty exit when the action turns sour. “I think people are just trying to play the bear market rallies,” says Brian Gendreau, investment strategist at ING Investment Management. “There are some people out there who have to buy financials as they’re running diversified financial funds, so what they’re doing is, they add a financial firm that doesn’t look like a complete car wreck.” Mr. Gendreau says this does not yet feel like a new bull market, but he believes the market has essentially hit a bottom, even if it bounces around along that bottom for a while.

Thanks to Kevin for pointing to my appearance this morning on KPCC's "Airtalk" with Larry Mantle. I provided an overview of what the job loss means for the local economy, while my buddy Chris Thornberg drilled down on the prospect of further drops in home prices – and why it’s a good thing. Here's the link.