Asymmetry of news absorption

Companies often react significantly to news. This week’s Ethos analyzed about 15,000 instances of a sudden price reaction, attempting to uncover insights into how market participants react and how quickly news is absorbed into updated views. We found the market often overreacts to negative news. Bad news tends to travel faster, with investors more quickly updating their opinions. Good news seems to provide a more lasting positive residual lift, especially for companies with lots of analyst coverage.

 

Understanding how other market participants react to news can provide an edge.

 

Find the report HERE.