No Logic to How Market Swings Affect Individual Stocks

By Steve Dinnen

Signature Bank is a commercial bank based in New York that has been a solid performer, and I’m glad to own shares. But I got a little jolt on March 1 when the stock fell 8.9% for the day. That’s a big move. There was no earnings announcement, no earnings guidance, no ratings change—nothing to readily explain why that happened. Then from March 5 to March 7 it shed another 8.9%.

Just yesterday it climbed back 8.6%. That was nice. But why? Because these are volatile times for the market, a hallmark of geopolitical unrest. The market reacts to invasions, or thoughts of invasions, or thoughts of retrenchment, in outsized ways that drag along a lot of players. Ditto for interest rates and inflation (and Wednesday’s interest rate bump by the Fed).

On average, the market rises or falls less than 1% 70% of the time. A 2% up-down move happens 20% of the time, and 3% or more, 10%. But that’s the average of all the individual stocks. Yesterday, when the Dow rose 1.55%, my Ford shares added 3.24%. TradeDesk jumped 11.96% and Doordash a whopping 13.45%. Exxon shed 0.38%.

Welcome to the new world order. For the time being, anyway.

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