ANNANDALE, Va. (MarketWatch) -- "A foolish consistency is the hobgoblin of little minds," Ralph Waldo Emerson famously once said. His comment often comes to mind as I watch investors' reactions to various pieces of economics news. Only sometimes do they react with joy when economic news is good; on other occasions, the stock market will sell off in the face of such news. The same could be said when the news is bad. Chart of $INDU Take the stock market's reaction this past Thursday to the report that manufacturing activity in the Philadelphia region had contracted in early December to a much greater extent than economists had expected. ( Read story.) There were many occasions in recent years in which the stock market would have rejoiced at a report such as this, since it would have reduced pressure on the Federal Reserve to raise interest rates. But that is not how the stock market reacted Thursday, when, far from rallying on the news, it immediately sold off. Inscrutable as the market's reaction sometimes appears, however, it may actually make sense. In saying this, I follow the lead of an academic study several years ago that examined the market's reaction to unemployment news. The study was conducted by finance professor John Boyd of the University of Minnesota, Jian Hu of Moody's Investors Service, and finance professor Ravi Jagannathan of Northwestern University. ( Read the study.) The researchers found that when the economy was in recession -- as later determined by the National Bureau of Economic Research, the official arbiter of when recessions begin and end -- the stock market typically fell when the unemployment news was unexpectedly bad. But when the economy was in an NBER-declared expansion, more often than not the market rallied. The reason the market reacts differently during recessions than during expansions, according to the researchers: When the economy is growing, the positive effect of a strong jobs report is more than outweighed by the negative effect of the interest rate hikes that such a report makes more probable. Just the reverse is the case following a weaker-than-expected jobs report. Now the bad news of the jobs report is more than outweighed by the good news that the Fed will have less pressure on it to raise rates. During recessions, in contrast, interest rate hikes are less of a threat. So a strong jobs report is taken at face value as good news, and a weaker-than-expected report is considered to be bad news. This study can help us put in perspective the market's reaction to Thursday's economic news. That reaction suggests that investors' major preoccupation has shifted from what it was in recent months and years. On those prior occasions investors were less worried about a recession and more concerned about interest rate hikes from the Fed. Now it is just the reverse. This doesn't guarantee that we are in, or close to being in, a recession. But because the market distills so much more information than any of us can individually, it behooves us to take seriously its reaction to economic news -- and what that reaction tells us. And, unfortunately, what it's telling us right now is that there is a significantly increased chance that we'll soon be in a recession