wall street weather and stock prices the study of saunders (1993):saunders (1993): the study...

Wall Street Weather and Stock Prices

The study of Saunders (1993):

The study examined how the weather at Wall Street

influenced stock prices. Note that New York weather

is not relevant to variables connected to stock

prices. In addition, an earlier study showed that

Florida weather, which has an obvious influence on

orange crop, had only a minor influence on futures

prices of orange juice in New York City.

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Wall Street Weather and Stock Prices

Saunders examined stock prices at the New York stock exchange (Dow Jones Industrial Average) and New York City weather from 1927 to 1989. Moreover, he examined the NYSE / AMEX index from 1962 to 1989 and related to New York City weather.

He found a reliable correlation between New York City weather and stock prices: Stock sales increased when it was sunny, but decreased when it was cloudy.

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Wall Street Weather and Stock Prices

Saunders concluded that weather influenced mood

of those involved in stock trade, which in turn

influenced which price traders were ready to pay.

It is therefore important to include psychological

variables into models of asset pricing which are not

themselves relevant economically. Examples

include mood or processing fluency (see Alter &

Oppenheimer, 2006)

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