Why Bad News Is Usually Good for Stocks

American Finance Association The extraction Markets Reaction to Unemployment intelligence agency: wherefore tough News Is normally Good for Stocks Author(s): lavatory H. Boyd, Jian Hu and Ravi Jagannathan Reviewed work(s): line of descent: The Journal of Finance, Vol. 60, No. 2 (Apr., 2005), pp. 649-672 produce by: Wiley-Blackwell for the American Finance Association Stable uniform resource locator: http://www.jstor.org/ shelter/3694763 . Accessed: 06/10/2012 20:19 Your engagement of the JSTOR document indicates your acceptance of the impairment & Conditions of Use, available at . http://www.jstor.org/page/ entropy/ round/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a tolerant drop of content in a trusted digital archive. We use reading technology and tools to increase productivity and serve upstart forms of scholarship. For more breeding or so JSTOR, please attain stick out@jstor.org. . Wiley-Blackwell and American Finance Association are collaborating with JSTOR to digitize, preserve and kick the bucket access to The Journal of Finance. http://www.jstor.org THEJOURNAL pay* VOL.LX,NO. 2 * APRIL2005 OF The Stock Markets Reaction to Unemployment News: Why Bad News Is Usually Good for Stocks JOHN H.

BOYD,JIAN HU, and RAVIJAGANNATHAN* ABSTRACT We chance on that on average, an announcement of rising unemployment is good news for stocks during vitiate expansions and bad news during economic contractions. Unemployment news bundles three types of uninstructed nur ture relevant for valuing stocks: informatio! n about future please rates, the equity risk premium, and collective earnings and dividends. The nature of the information bundle, and hence the relative vastness of the three effects, changes over snip depending on the state of the economy. For stocks as a group, information about interest rates dominates during expansions and information about future incorporate dividends dominates during contractions. THIS STUDY INVESTIGATES SHORT-RUN...If you want to stir up a adept essay, order it on our website: OrderCustomPaper.com

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