BetterTrades News
News announcements can sometimes change the perception of the way a stock is seen by the buying public. If good news comes forth, investors of the stock may potentially react appropriately and send the price of the stock racing upward. On the other hand, if bad news is delivered, the opposite will usually occur and the price of a stock may go plummeting toward the basement.
One source of news that drives the price of a stock is the quarterly earnings announcement. Every four months a publicly held company must release important figures that are of interest to investors. Sometimes the news is good and sometimes the news is not good, but that doesn't always determine a stock's movement. Perhaps a company had a good quarter and announced good earnings, but the investors were expecting more. When that occurs, even though the news is good, it does not meet expectations and the price may fall. So it's more about the manner in which the news is perceived and current market conditions than it is about the actual news.
Other factors can also possibly sway a company through news, including:
- Spinoffs: When one company spins off a second company.
- Splits: When a company announces it will split its stock, the price of the stock will generally rise as the date approaches.
- Contracts: These can be great news for the company that receives the contract. Conversely, a competitor's stock can fall dramatically on such an announcement.
- Rumors: Doesn't matter if they're true, because the rumor can potentially move the price.
- Acquisitions: It's usually good news for the company being acquired and bad news, at least temporarily, for the company doing the acquiring.
- New products: This can possibly spark good news. Just ask Apple shareholders around the time the iPhone was introduced.
- Upgrades and downgrades: When a security's rating is upgraded or downgraded by a brokerage firm, it can potentially affect the price of a stock.
- FOMC meetings: The Fed meets eight times a year to determine monetary policy and can possibly sway the markets.
- Lawsuits: A company that wins a lawsuit will sometimes see its stock go higher, while the losing company may take a punch in the profit column.
- Being added to an index: Companies that are added to important indexes (Dow Jones 30, NASDAQ 100, etc.) can potentially see their share prices increase. Those taken out of the index traditionally lose value.
Earnings season is bunched into several action-packed weeks each quarter, with Alcoa Aluminum (AA) traditionally the first company to announce. Many times the announcements of stocks can affect others in the same sector, a group of companies that produce the same goods and services. For example, if Delta has a great earnings announcement and its stock rises sharply, the other airline stocks may follow suit.
