Last Updated Feb 18, 2011 1:40 PM EST Both investors and the financial media spend much of their time and efforts trying to determine what (if any) changes there will be in government policies and how the changes will impact stock prices. This focus increases during periods of financial crises. The questions for investors and policy makers are:What impact will uncertainty about government policies have on stocks prices? What impact will the actual announcements have? In their paper "Uncertainty About Government Policy and Stock Prices," Lubos Pastor and Pietro Veronesi considered two types of uncertainty: Policy uncertainty relates to the uncertain impact of a given government policy on the proï¬?tability of the private sector. Political uncertainty captures the private sector's uncertainty about whether current policy will change. They found that both types of uncertainty affect stock prices in important ways. The following is a summary of their findings: The … [Read more...] about How Uncertainty About Government Policy Affects Stock Prices
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The epic meltdown in energy prices has more recently been taking a bit of a breather. Just look at gasoline, which collapsed nearly 61 percent from its high last summer to the low in January before reversing and zooming higher, climbing 61 percent earlier this month. Crude oil rebounded as well: West Texas Intermediate (WTI) jumped 24 percent from $43.58 a barrel to a high of $53.99 in early February. But the evidence is building that another bout of weakness is about to hit energy prices -- with mixed benefits to consumers, the economy and stocks. For gasoline, the rebound was fueled by a combination of factors, including the largest refinery strike in 35 years -- affecting a fifth of the country's capacity -- as well as a refinery fire in California and seasonal formulation changes and refinery maintenance shutdowns. On Thursday, United Steelworkers union, which represents the refinery workers, said it had reached a tentative deal with Shell Oil (RDS.A) after a month of tough … [Read more...] about Why gasoline and oil prices could slide again
U.S. equities moved further into record high terrain again on Tuesday, showing a steadfast resistance to anything resembling selling pressure since the middle of August. The action was nearly a carbon copy of Monday's: An accelerating ramp at the open moderated into the closing bell. No major catalysts were in play, although solid September auto sales got some attention. The focus remains on the near vertical rise in small-cap stocks (chart below), which actually spent the bulk of the day trading in negative territory before rallying into the closing bell -- ensuring all the major averages notched a new record high. This market doesn't feature a lot of texture or undercurrents. Instead, it's a continuation or even a heightening of trends that have been in play for months if not years. The extinguishment of volatility, rock-solid belief in the U.S. economy's stability and healthy corporate earnings -- all with the backstop of excess liquidity sloshing around the financial system. … [Read more...] about Can anything pull stock prices back to earth?
Shares in ailing Under Armour (UA) plunged after the sportswear maker forecast weaker domestic in sales and profits through the end of the year. Under Armour CEO Kevin Plank said in a statement that "operational challenges and lower demand" for its products in North America hurt the company's third-quarter results. He that international sales are growing more quickly. Under Armour's stock price fell nearly 16 percent to $12.40 in early afternoon trading. The company's shares are down more than 50 percent this year. The Baltimore company also lowered its annual per-share earnings forecast for the second time in three months, to between 18 and 20 cents per share. That's about half what it told investors to expect in August. Shares of rivals Nike (NKE) are up nearly 8 percent in 2017, while Adidas is on an even bigger roll. In a conference call with stock analysts to discuss the Under Armour's latest financial results, Plank said a host of factors hurt its third-quarter … [Read more...] about Under Armour stock price slumps as brand loses luster
Presidents love to take credit for a rising economy and stock market, and Donald Trump is doing so with customary brio, amplified by his trusty Twitter account. But amid the self-congratulations, the truth is that other forces at play before he took office are primarily fueling the good news. In a series of recent tweets, President Trump touted his administration's policies for sparking the heady numbers. "GDP was revised upward to 3.1 for last quarter." he wrote. "Many people thought it would be years before that happened. We have just begun!" There's little doubt that the GOP-controlled Congress' progress on a tax-cut bill -- Senate and House negotiators must meld their different versions before final passage -- has spurred the most recent leg up in the stock market. The plan to slice the corporate tax rate to 20 percent from the current 35 percent, for instance, should boost per-share earnings for companies in the Standard & Poor's 500 by $10 next year, from the projected $141, … [Read more...] about Trump’s meager impact on the economy and stocks