Buying The Rumor
By Wed, Nov 11, 2020
Hey Scoopers,
The Dow kept on surging, while the Nasdaq took the opposite direction. — More on that in the “Overall Market” section.
Beyond the overall market, an aircraft manufacturer made good progress with regulators in the U.S. At the same time, a tech company got into trouble with the regulators in the E.U. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, buying the rumor didn’t pan out as investors had hoped. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: Stock market indices didn’t agree on the direction on Tuesday. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: On Tuesday, Bitcoin’s price movement lost its momentum and continued to hover in the same range it was on Monday.
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Vaccine Excitement Continued
The market’s excitement about the COVID-19 vaccine progress continued, and the DOW continued its upward movement. The so-called work-from-home and technology stocks continued to lose momentum, dragging the Nasdaq index down by more than 1%.
Good Progress
So what happened?
Shares of Boeing (Ticker: BA) were up by more than 4% on Tuesday. The news broke that the FDA is ready to approve 737 Max’s software fixes and allow Boeing to bring back its fleet to the market. Of course, FDA approval is excellent progress. However, the COVID-19 pandemic and its impact on the travel industry is still a big hurdle in front of Boeing’s old-time glory.
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Regulatory Barrier
So what happened?
Shares of Amazon (Ticker: AMZN) were down by more than 3% on Tuesday. The European Commission announced that Amazon had breached its antitrust laws by using third party sellers’ data to produce and sell its own-branded products. The European Commission plans to continue its investigation, and the result may very well be a large fine and possible change in Amazon’s business, at least in the short-term. Regulatory intervention is one of the only barriers large tech companies such as Amazon may face on their way to dominate the market.
Don’t Buy The Rumor
So what happened?
A few days ago, Biogen’s (Ticker: BIIB) stock surged more than 42%. The surge was due to a rumor that the FDA is expected to approve its Alzheimer’s drug in the clinical trial. The company had only announced that it would share some updates, and the ever-so-optimistic investors took that as the sign that an FDA approval is not too far, and the stock price surged like a rocket. As they say, investors bought the rumor.
Well, everything was good until the actual FDA report came out, and the news was nothing investors were expecting. The drug got rejected by the FDA, and the rumor turned out to be just a dream on behalf of investors.
The moral of the story is, don’t buy the rumor!
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
