Why Can the Market Rise When the News Is Bad?
A common question we’re hearing from clients is how the market can perform well when the picture of the world painted by the news seems generally negative.
For this discussion, I’m using “the market” as shorthand for the broad U.S. stock market. As one example, the S&P Total Market Index was up 12.53% year to date through September 24, 2026.
So how can the market rise while the world is facing challenges like war, political uncertainty, and unexpected increases in interest rates?
There is almost always bad news
Unfortunately, as investors, we don’t get an “all clear” signal once the bad news stops. Waiting for uncertainty to disappear comes with its own risk, just as staying invested during uncertain times does. Historically, bull markets have coexisted with wars, inflation, political uncertainty, and geopolitical events.
Bad news also sells. We’ve entered a new age of news consumption where there are seemingly endless sources representing different points of view. In some ways, this is healthy because ideas can compete in the marketplace. In other ways, especially through social media, we’re increasingly targeted with information that speaks to our preconceived beliefs. And with so many voices competing for views, likes, and clicks, sensationalism can win the day. Someone somewhere is always being targeted with bad news.
The market is not a reflection of the news
For shorthand, we often talk about “the market” as if it were one giant thing. But its price ultimately reflects the collective expectations for the future profitability of thousands of individual companies.
Demystifying the market and thinking instead about individual companies pursuing profits can help us understand why the news and the market don’t always move together. The news—even bad news—is important. But it doesn’t necessarily destroy corporate earnings.
The news is often focused on what has happened or what is happening right now. The market is attempting to predict where we are going next.
Companies adapt
Markets do move based on the news. But that movement is based largely on changes in expectations. If a war unexpectedly breaks out, for example, that can move markets quickly. Companies pursuing profits thrive on consistency and predictability, and sudden changes in the environment can threaten a business’s plans.
But companies aren’t standing still either. They can change prices, cut costs, find new suppliers, invest in new technology, or change their strategy altogether. Some will adapt better than others. Those that don’t may lose market share, struggle for extended periods, or ultimately go out of business.
Market shocks can also expose weaknesses that were easier to overlook during better times. Companies built on rapid growth but unsustainable business models can become much more vulnerable when conditions change. Of course, those periods can also result in significant losses and prolonged uncertainty for investors.
As Warren Buffett famously said, “Only when the tide goes out do you discover who’s been swimming naked.”
Market timing and bad news
Investors often think they can predict market movements based on the news. But stock prices respond quickly to new information. Using today’s news to predict tomorrow’s market movement isn’t as sure a thing as we might instinctively think. Much of that information may already be reflected in prices.
Some of you may remember a past newsletter where I wrote about the wisdom of the crowd. In a classic example, a group of people is asked to guess the number of items in a container. Individual guesses vary widely, and many are way off. But when all the guesses are averaged together, the result can be remarkably close to the actual number.
The lesson is that we can go it alone and make our own guess about what happens next, or we can recognize that the market is already incorporating the collective expectations of millions of investors.
The market certainly won’t always get it right. But using today’s headlines to predict where it goes next is much harder than it seems. By the time we read the news, millions of investors have already processed that same information and made decisions based on what they think it means for the future.
For long-term investors, that brings us back to something much less exciting—but much more useful: having a plan, staying diversified, and remaining disciplined when the headlines tempt us to do otherwise.
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Andrew Eppes, CFP®
Source: S&P Dow Jones Indices, S&P Total Market Index (TMI), performance data as of September 24, 2026. The S&P TMI is designed to track the broad U.S. equity market, including large-, mid-, small-, and micro-cap stocks. Year-to-date price return: 12.53%.
https://www.spglobal.com/spdji/en/indices/equity/sp-total-market-index-tmi/
This material is provided for general informational and educational purposes only and is not intended as investment advice or a recommendation to buy, sell, or hold any security or investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. The appropriateness of any investment strategy depends on an investor’s individual objectives, financial circumstances, time horizon, and tolerance for risk. Asset allocation does not guarantee a profit or protect against loss in declining markets. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio or that diversification among asset classes will reduce risk.
Andrew Eppes is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.SIPC.org. Nexus Advisors, LLC is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway Suite 1200 Dallas, TX 75254 972-348-6300. The views and opinions expressed are of Andrew Eppes only. They are not necessarily those of MML Investors Services, LLC. CRN202910-23209049
Andrew Eppes, CFP®
Andrew Eppes is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.SIPC.org. Nexus Advisors, LLC is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway Suite 1200 Dallas, TX 75254 972-348-6300. The views and opinions expressed are of Andrew Eppes only. They are not necessarily those of MML Investor Services, LLC.CRN6533429052024