Loading ...One of the things you’ll come to learn if you follow the markets and their reaction to economic news is that it’s all about how the news compares to expectations. You see, investors (as a whole) are generally pretty savvy. The market (another way of referring to all investors as a group, including big mutual funds and hedge funds) incorporates all information that is currently available to the public into the price of a stock. In theory, prices of stocks are based on expectations for future earnings (profits). And when the economy improves overall, that helps all companies. The best analogy is the one about how “a rising tide lifts all boats.” So, economic news moves the whole market, while news that is specific to a company or industry will mostly move the prices for that company or industry, but it does so against the backdrop of what’s happening in the economy. In the months and several years after the financial crash of 2008, economic news was a huge driver of the markets, even more so than usual.
