Impact of News on Stock Prices

Market often prices in known events before they happen, meaning that by the time news breaks, the impact may already be reflected in the stock price. "The market knew this was happening. It is not a surprise, it is on a schedule."

"Sell the news" is a common phenomenon where a stock's value runs up in anticipation of good news, and then sells off once the news is announced. "“Sell the news” only applies to news that sounds good but the math doesn’t support the current valuation following the run-up."

Algorithms and institutional trading often react faster than individual investors to news, making it difficult for retail traders to profit from news-driven events in real-time. "Machines react to macro news in 2–3 milliseconds, while human reaction time is ~200 ms."

Market movements can precede news explanations, with media often assigning reasons to market shifts after they occur. "The market doesn't move on news. The market moves and the Media assigns it a reason (news) after."

Fundamentals may not always drive short-term stock prices, as hype, social media trends, and algorithms can influence movements more than traditional financial metrics. "It’s not about fundamentals anymore, everyone only chases hype."

"Bad news is good news" can occur in certain macro setups, such as a weak jobs report leading to a market rally due to reduced pressure on the Federal Reserve to hike interest rates. "Friday's July jobs report was genuinely weak, and the market rallied to record highs on it."

Long-term investors often ignore daily news fluctuations, focusing instead on consistent investments like index funds. "I simply ignore all the news and buy index funds every time I get paid."

Macroeconomic trends and policy changes can have a significant long-term impact, such as national debt potentially leading to inflation or affecting interest rates. "Yes. US debt keeps interest rates higher than they should be which is a drag on the economy."

The stock market and the broader economy are not always in sync, as the market reflects future expected corporate profits while the economy relates to jobs, incomes, and production volumes. "These things aren’t the same, they’re loosely correlated over long periods of time but that’s about it."