The news cycle is closely tied to the stock market. This is true whether you're investing in the US, the UAE, or somewhere in between. As a foreign investor in the US stock market, keeping your finger to the pulse of American news is key.
How American news impacts the US stock market
Domestic news impacts the US stock market directly. In general, there are two types of news:
Good news
Bad news
Here's an explanation of how the different types of news could impact your portfolio.
Bad news can be tied to a specific company, industry, or entire market. If a company has a poor earnings report, lawsuit, or some sort of scandal, it can cause shareholders to sell the stock. Just look at Activision Blizzard (NASDAQ:ATVI), whose stock plummeted after reports surfaced about harassment in the workplace.
If an industry is struggling from supply chain issues, labor shortages, or other issues, that bad news can impact the whole sector. This can be seen in the tech selloff that occurred in September 2021.
An entire market can also struggle or crash, as evidenced in February 2020 at the onset of the COVID-19 pandemic.
On the other hand, good news can cause an upswing. For a specific company, positive earnings reports, mergers and acquisitions, and other occurrences can cause people to buy a stock. For example, stock for electric lighting materials provider AZZ Inc. (NYSE:AZZ) rose higher after beating earnings expectations in fiscal Q2 2021.
If an industry is thriving—like CRISPR biotechnology in 2020—the entire sector sees a boost.
Markets can increase as a whole on positive news from the Federal Reserve or other economic factors.
When bad news is good
The stock market isn't as simple as bad vs. good. Sometimes, bad news can make certain stocks rise. For example, stay-at-home stocks like Peleton (NYSE:PTON) and Chewy (NYSE:CHWY) did well during the pandemic, even when other stocks struggled to reach pre-pandemic levels.
International news matters to the US market, too
The Evergrande crisis is taking the world by storm in the fourth quarter of 2021. The Chinese property developer is $300+ billion in debt, and the Chinese government may bail them out or let them falter. Evergrande is a massive company, and its impact can be felt worldwide.
This is one example of how international news matters to the US market. The US doesn't live in a vacuum, and being aware of geopolitical and economic news beyond American borders is key.
Simple ways to stay informed as a foreign investor
Sign up for a newsletter. Some of the biggest US stock market newsletters include Morning Brew, InvestorPlace Digest, and Morning Squawk (a before-the-bell roundup).
Set up Google alerts. Use terms like technology, supply chain, retail, or any other phrase to target relevant topics.
Listen to podcasts. Discover options like The Indicator from Planet Money, Motley Fool Money, and NPR's Marketplace.
Disclaimer
This article is for educational and informational purposes only. It is not investment advice, nor a recommendation, offer or solicitation to buy or sell any security or digital asset. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results.
Securities brokerage services are provided by Fullerverse (SC) Limited, a securities broker-dealer licensed and regulated by the Financial Services Authority of Seychelles (Licence No. SD152). Fullerverse (SC) Limited is a wholly-owned subsidiary of Raseed Invest Inc. Registered address: House of Francis, Room 302, Ile Du Port, Mahe, Seychelles.
Cryptocurrency services are made available by Raseed Crypto LLC ("Raseed Crypto"), a FinCEN-registered money services business (MSB Registration No. 31000316890439) and a wholly-owned subsidiary of Raseed Invest Inc. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC. Cryptocurrency is highly speculative in nature and involves a high degree of risk, including volatile market price swings, market manipulation, flash crashes and cybersecurity risks. Cryptocurrency regulations are continuously evolving, and it is your responsibility to understand and abide by them. Cryptocurrency trading can lead to large, immediate and permanent loss of financial value. You should have appropriate knowledge and experience before engaging in cryptocurrency trading. For additional information, please see our Crypto Risk Disclosures.
Cryptocurrency services are not offered by, and are not available through, Raseed Invest Limited, which is regulated by the Dubai Financial Services Authority. Products and services referenced in this article are not available in all jurisdictions and are not directed at any person in a jurisdiction where their offer or availability would be contrary to local law or regulation.
