What types of news affects market performance?
Have you ever thought about all the news you hear day in and day out, good or bad? Now do you ever wonder of all that news, what actually affects the market’s performance?
Any one of these news categories itself may not make a large impact, but paired with news in one or two additional categories in the same day or week it could be a recipe for increased market volatility. However, the story of the day can also make the market move just throughout that day (intraday).
Let’s dig in to different categories of news and the effects they can have on the market.
This category envelopes news from the President to your local legislators. Depending on what the news is being delivered this can play a crucial role in the daily performance of the market. Like many people you follow regularly in news outlets, it also depends on the source as to how believable it is. Also, the weight of what is being said can cause changes to daily performance intraday.
These stories would include company or industry specific news about new products or expected actions for locations or employees. This type of news may move stocks of specific companies and depending on the weight of the story could affect the overall market. If the news from one company becomes a trending story between several companies in a given sector it could affect performance for a day or a longer period of time.
Included in this type of news are stories relating to other countries around the world. This type of news could also be political in nature. These stories could relate to items of our country’s safety or defense. Also included here could be trade or economic issues between other countries. Like the other categories these can affect the market for a short or longer period of time.
Examples of this type of news are upcoming weather conditions or natural disasters. One event happening in an area with little civilization or little economic activity could make a smaller market reaction than an a situation in an area of higher civilization responsible for a larger amount of economic activity. Because of the impact delays or days of no business can have, the severity of the event expected will affect how the market reacts.
Seasons of the year, holidays, or other times that drive shopping or consumer activity higher can impact specific companies in the market. Likewise, changes in expected seasonal expectations can impact the performance of stocks trading on the exchanges. This can be news of longer-term trends or shorter in nature too. But, yes these stories can affect the market’s performance.
As you listen and consider the news being shared think about the long-term implications from the daily scoop. Often the market will react the day news comes out and then calm will come again after investors realize it was never something to panic about to begin with. There are also times when the news is delivering a warning sign you need to pay attention to. To gauge what news might be a market mover consider the source, the rest of the economic and political environment, and your reason for investing.
As you’re investing realize that every day will bring different stories. Be clear on your goals so that you will know when you need to make changes in your investment allocation because of stories that will affect the market for longer periods of time.
If you need help weeding out the stories that are distracting please let us know! We can help provide you with direction for how to allocate your portfolio based on your goals.