Unexpected Inflation

As we discussed in the textbook, stock prices move when unexpected news comes to light. Economists expected that inflation for July would be 8.7 percent, lower than June's 9.1 percent. Instead, it was announced today that July's inflation was "only" 8.5 percent. The stock market reacted dramatically as the S&P 500 jumped about 2 percent and both the Nasdaq and Russell 2000 jumped almost 3 percent. And for investors in Disney the news was even better: EPS was $1.09 compared to the $.96 estimate, and the subscriber addition was 14.4 million streamers versus the expected 10 million. With the combined market news and company news, Disney stock jumped about 7 percent.