What drives big moves in national stock markets? The benchmark view in economics and finance holds that stock price changes reflect rational responses to news about discount rates and corporate earnings, which suggests that big daily moves are accompanied by readily identifiable developments that affect discount rates and anticipated profitability. Another view, first introduced by Keynes in1936, suggests that investors price stocks based not on their opinions about fundamental values but on their opinions about what others think about stock values.

In either case, though, these forces are described in contemporaneous news accounts, according to the authors, and they employ such accounts to distill information about what triggers big moves in national stock markets. The authors examine next-day newspaper accounts of large daily jumps in 16 national stock markets to assess their proximate cause, clarity as to cause, and the geographic source of the market-moving news. Their sample of 6,200 market jumps yields several findings:

• Policy news, mainly that associated with monetary policy and government spending, triggers a greater share of upward than downward jumps in all countries.
• The policy share of upward jumps is inversely related to stock market performance in the preceding three months. This pattern strengthens in the postwar period.
• Market volatility is much lower after jumps triggered by monetary policy news than after other jumps, unconditionally and conditional on past volatility and other controls.
• Greater clarity as to jump reason also foreshadows lower volatility. Clarity in this sense has trended upwards over the past century.
• Finally, and excluding US jumps, leading newspapers attribute one-third of jumps in their own national stock markets to developments that originate in or relate to the United States. The US role in this regard dwarfs that of Europe and China.

Regarding their final finding, the authors note that from 1980 to 2020, 32 percent of all jumps in non-US stock markets were triggered by news emanating from or about the United States. This assessment reflects the reportage in leading own-country newspapers about their national stock markets. Also, jumps in other countries attributed to China-related developments were rare before the mid 1990s but have become much more frequent in recent years.