“The market has already priced that in”

I keep reading commentary about how the market is forward-looking and has “already priced in” most bad news and negative statistics so far for 2023. And this inspires confidence and optimism, because bad news such as a huge inflation number becomes good news when it is a lower bad number than the original projection.
But then, isn't this forward-looking pricing system extremely vulnerable to any piece of news that can arrive on any given day that deviates from expectations (in the opposite direction)? Instead of reacting to facts appropriately as they become available and constantly living in reality, the market is always tweaking it's crystal ball.
Basically what I am trying to say is… why should we have any level of confidence at this particular juncture, if one single fed meeting or release of any one company's earnings has the potential to cause an abrupt 10% increase or decrease in either direction?