The Stock Market's Reaction to Unemployment News: Why Bad News is Usually Good for Stocks

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John H. Boyd; Ravi Jagannathan; Jian Hu;
(2001)
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    • jel: jel:G1 | jel:E3
We find that on average an announcement of rising unemployment is 'good news' for stocks during economic expansions and 'bad news' during economic contractions. Thus stock prices usually increase on news of rising unemployment, since the economy is usually in an expansi... View more
  • References (5)

    French, Kenneth R., G. William Schwert and Robert F. Stambaugh, 1987, “Expected stock returns and volatility”, Journal of Financial Economics, 19, 3-29.

    Gertler, M., Grinols, E.L. (1982), “Unemployment, Inflation, and Common Stock Returns”, Journal of Money, Credit and Banking 14, 216-233.

    Glosten, Lawrence R., Ravi Jagannathan, and David Runkle, 1993, “On the relation between the Expected Value and the Volatility of the Nominal Excess Return on Stocks”, Journal of Finance, Vol 48, No. 5, 1779-1801.

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