Why is it that some good news from a company will launch its stock price up, while other good news from it will have no effect at all? It largely depends on what investors have been expecting. Sometimes news isn't really news to most people.
For example, imagine that people following McDonald Farms Inc. (ticker: EIEIO) have determined that sales really picked up in recent months. The stock price may have been steadily moving up as more people piled into it, excited by the company's growth prospects. Let's say McDonald suddenly reports that earnings rose 40% in the last quarter, more than the company had forecast. If that's what investors were kind of expecting, the stock might not move much on the news. But, if investors were expecting a significantly higher or lower growth rate, you might see the stock jump up or down.
Here are some stock moves for a day in March -- they tell you a little about what investors were thinking:
(NYSE:C)was down 12 cents to $44.32 after agreeing to pay a fine of $20 million to settle charges related to a scandal about brokers recommending various mutual funds. Investors apparently weren't stressed out about this.
(NYSE:GM)dropped about a dollar to $28.56 on news that it was looking to sell a portion of its GMAC Commercial Mortgage division for perhaps a billion dollars. That was a lot of money, but not enough to get investors excited, given the company's problems.
- Video game company GameStop
(NYSE:GME)saw its shares surge 14% to $22.30 when it reported earnings above Wall Street expectations by a penny per share. The stock had fallen considerably on an earnings warning, earlier, so investors were apparently relieved and excited.
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