discounting the news

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Discounting the news

An adjustment of a stock's price as speculators bid the price up or down in anticipation of news about the company, whether good or bad.

Discounting the News

Describing a situation in which the market has already incorporated expected information into the price of a stock. That is, if a company's earnings are large for a particular quarter, it may leak the information so that investors discount the news, reducing the pressure for an unsustainable jump in price when the earnings are actually announced. For this reason, the Federal Reserve issues statements indicating what policy changes it might make before it makes them, allowing the markets to adjust before the announcement.

discounting the news

Adjusting a security's price so that it already reflects some anticipated event or series of events. For example, a stock price may be unaffected by a favorable earnings report because the report was expected. Likewise, a bond's price may not fall on a rating downgrade because investors anticipated the downgrade and had priced the bond to discount the event.
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