Stock Markets Exposed

If the stock market is supply and demand, why would bad news from a company send its stock prices down?

Public Comments

1. demand goes down cause people are less likely to invest in a company with bad news.
2. When a company has bad news, nobody wants to hold on to its stocks thus resulting in selling (no demand for takers) causing the prices to come down.
3. Ummm... because the supply is constant but the demand decreases (ie fewer ppl want to buy a stock that just released bad news). Not an expert, just a guess.
4. Hi, The stock market is more than just supply and demand. It's belief. Believe a company will grow and you'll buy its stock. Believe a company will diminish and you'll sell. Bad news can indicate trouble and people "jump off" worried the ship might sink. Much of this activity is simply knee jerk panic but it explains the day to day ups and downs of the market. I sincerely trust this helps. Warmly, Slav
5. The stock market is about more than supply and demand, but you can certainly use that theory to explain the situation. Supply remains constant (straight line vertically in the short run) but the demand curve shifts to the left or down because for all quantities, bad news signifies a worse "product" overall. Now the intersection is at a lower price for the quantity supplied.
6. As many users have said, no one wants to hold a company that has just put out bad news. I heard from a fund manager that they normally sell companies that announce bad news because they worry that "more bad news often folllows the bad news!" and so the selling accelerates and demand stays same or falls and the stock takes a dive!