do stocks rise after earnings? Practical evidence

As of January 22, 2026, market coverage and research make the question “do stocks rise after earnings” a practical one for investors and traders. This guide synthesizes practitioner notes and academic work to explain common patterns, variability across firms, trading implications, and robust ways researchers measure post‑earnings moves.

Do stocks rise after earnings?

Earnings announcements are scheduled corporate disclosures (quarterly or annual) that report revenue, EPS, and management guidance. Investors commonly ask: do stocks rise after earnings? Empirical work shows that, on average, stocks exhibit abnormal returns and frequent price jumps around earnings, and many practitioner reports find a modest average positive return in a short earnings window — but the cross‑sectional outcomes vary widely. This article explains the evidence, the mechanics of price reactions (including after‑hours behavior), spillovers to peers, options dynamics, trading considerations, and methodological caveats.

Background: what are earnings announcements and why they matter

Earnings announcements typically include: reported earnings per share (EPS), revenue, segment breakdowns, and forward guidance. Companies usually report quarterly, often after market close or before open, to allow time for press releases and conference calls. Earnings are scheduled, high‑information events that resolve uncertainty about a firm’s recent performance and sometimes update forward expectations. Because they are predictable dates with potentially large information content, earnings reports are central to price discovery and commonly produce spikes in volatility and trading volume.

Early in this guide we explicitly address the reader asking “do stocks rise after earnings”: short answer — on average the surrounding window shows abnormal returns and many stocks move up, but averages mask wide dispersion and risk. You will learn how researchers and market analysts reach that conclusion and what it means for trading.

Aggregate empirical findings

Large‑sample studies and industry notes provide a consistent headline: earnings releases are associated with large price moves and, in many samples, a small average positive return in the immediate earnings window. Key takeaways:

• Several practitioner analyses (including major investment banks) report that the average stock historically posts a modest positive return in the short window around earnings. For example, some sell‑side summaries show a positive mean excess return on earnings days in recent decades.
• Academic work emphasizes jumps and volatility. National Bureau of Economic Research (NBER) digests and Journal of Financial Economics (JFE) articles document that earnings lead to frequent jumps and elevated intraday volatility rather than smooth small moves.
• Industry commentary (news outlets and company coverage) shows that stronger macro context — e.g., coordinated market rallies driven by resilient corporate earnings and moderating inflation — can amplify positive post‑earnings reactions across indices (as seen in market sessions where major indices rose more than 1%).

These results combine two messages: (1) earnings reliably matter for price formation, and (2) the average direction can be positive, but outcomes are heterogeneous.

Representative market‑analytics findings

Proprietary analytics and sell‑side notes often summarize long histories of earnings reactions. For example, investment desks have found that, over large samples, the mean abnormal return around earnings is slightly positive when conditioning on typical inclusion filters (liquid stocks, no extreme corporate events). Goldman's internal analyses and other large dealers have published short research notes suggesting the "average stock rises on earnings" in their sample windows — though the size of the mean effect is small and sensitive to sample period and filters.

These practitioner results are useful for a heuristic answer to “do stocks rise after earnings,” but they are not a trading rule by themselves. The documented mean can result from asymmetries in pre‑announced expectations, short covering, and institutional positioning.

Academic evidence

Academic studies provide deeper mechanistic insight. A notable Journal of Financial Economics paper documents "warp‑speed price moves": earnings announcements produce discrete jumps in prices (coined "earnings jumps") that are statistically distinguishable from background microstructure noise. The UC San Diego / Rady School summary of this JFE work and related NBER digests highlight three points:

1. Earnings releases are a leading source of price jumps for individual equities.
2. Jumps are often large and concentrated around the exact release time.
3. There are spillover effects: related firms and sometimes sector indices co‑jump following a major firm’s release.

Taken together, the academic evidence explains why the short window around earnings is riskier and why simple average outcomes (the question: do stocks rise after earnings?) must be interpreted together with volatility and jump probabilities.

Price dynamics around earnings

The short‑term behavior of a stock around an earnings release typically includes:

• Immediate jumps: discrete re‑pricing occurs at the release or in after‑hours trading.
• Elevated volatility: implied and realized volatility spike before and during the release.
• Volume surges: trading volume often multiples compared to typical days.
• After‑hours vs regular‑session differences: many companies report after the close, and significant moves can show up overnight and gap at open.

These dynamics explain why the same earnings report can produce a strong intraday rally in one market session and a reversal or muted move in the next.

Jumps and microstructure issues

Researchers must separate true price jumps from microstructure noise (thin order books, sparse after‑hours quotes). The JFE paper and follow‑up work apply noise‑robust jump tests (pre‑averaging, jump detection robust to bid‑ask bounce) to show that earnings produce statistically significant jumps beyond what microstructure can explain. Practically, traders seeing large after‑hours prints should be mindful that those moves reflect limited liquidity and may widen spreads at open.

After‑hours vs intraday reaction

A sizable fraction of firms release earnings after market close. Price discovery then continues in extended hours trading where liquidity is thinner and spreads wider. After‑hours moves can be large and then either endure at the open (gap) or partially retrace during the regular session as liquidity returns and institutional participants reposition.

This distinction matters to the question “do stocks rise after earnings” because some positive moves recorded in practitioner averages originate in after‑hours sessions and may be revised at the next regular session.

Spillovers and market/co‑jump effects

Earnings from large, systemically relevant firms can co‑move with related companies and sometimes the broader market. Evidence shows:

• Peer effects: an earnings surprise at one firm can update sector expectations, producing co‑jumps in suppliers, customers, and competitors.
• Index effects: when mega‑cap names report, sector or index returns can be materially affected, contributing to sessions where major indices rise together (for example, market sessions with synchronized gains across the S&P 500, Nasdaq, and Dow).

Because of these spillovers, the effect of a single firm’s report can be magnified across portfolios and ETFs.

Theoretical explanations and behavioral mechanisms

Why do stocks sometimes rise on average after earnings? Economists and market practitioners propose several mechanisms:

• Information surprise: positive earnings surprises relative to consensus naturally lift valuations.
• Uncertainty resolution: firms with high pre‑announcement uncertainty can command a premium when results reduce downside risk.
• Short covering and forced flows: when earnings beat expectations, short sellers may buy to cover, creating upward pressure.
• Investor repositioning: institutions rebalance and reallocate capital based on new fundamentals.
• Pre‑event risk premia: some models suggest that investors demand compensation for holding a stock through a risky event; when risk materializes and is favorable, the relief premium can be captured as a price rise.

All these channels can help explain the average positive tilt observed in many practitioner samples — but they do not guarantee a rise for any one report.

Heterogeneity — when stocks rise and when they don’t

The answer to “do stocks rise after earnings” is qualified by heterogeneity across firms and events. Factors that explain cross‑sectional differences include:

• Surprise magnitude and direction: larger positive surprises are more likely to produce a rise; misses often trigger significant declines.
• Firm size and liquidity: large, liquid firms may show smaller percentage jumps but can move market indices; small illiquid firms can show very large percent moves but are exposed to microstructure noise.
• Guidance quality: positive management guidance or upward revisions can amplify post‑earnings gains.
• Pre‑announcement drift: pre‑earnings run‑ups can reduce the likelihood of strong post‑release rises because much of the good news is already priced in.
• Sector conditions: cyclical sectors often react more to macro signals, while defensive sectors may move less.

These sources of heterogeneity highlight why you cannot assume that “do stocks rise after earnings” implies a universal buy rule.

Trading implications and common strategies

Traders and investors commonly apply event‑driven approaches around earnings. Common strategies include:

• Event‑driven equity trades: buying (or shorting) shares after an earnings surprise depending on the direction and liquidity.
• Buy‑the‑dip: some traders buy significant post‑earnings dips when fundamentals appear intact.
• Volatility strategies in options: buying straddles or strangles to capture big moves or selling premium to capture pre‑earnings IV (implied volatility) if comfortable with directional risk.

Before attempting any of these, remember that strategy performance depends on transaction costs, liquidity, timing, and risk controls. The mere fact that averages show positive returns does not make a naive, unhedged strategy profitable.

Options around earnings (implied volatility and "vol crush")

Options markets often price in higher implied volatility leading into earnings. After the release, implied volatility tends to drop sharply — a phenomenon called "vol crush." Typical implications:

• Buying options before earnings is expensive due to elevated IV; if the realized move is insufficient to overcome the IV, buyers can lose even if the stock moves in the anticipated direction.
• Selling premium (e.g., selling straddles) can profit from vol crush but exposes the seller to large directional risk if a big surprise occurs.
• Directional call or put purchases post‑earnings may be cheaper and appropriate when liquidity and directional conviction are strong.

Charles Schwab and other option‑market guides emphasize careful sizing and awareness of the IV term structure when trading around earnings.

Risks, limitations, and caveats for investors

When answering “do stocks rise after earnings,” several important caveats apply:

• Transaction costs and liquidity: spreads widen after hours and at open; real trading costs can erode expected gains.
• Adverse surprises: misses can produce sharp losses; tail risk is real in earnings windows.
• Sampling and look‑ahead biases: academic and practitioner samples vary in period, selection rules, and survivorship filtering — all can bias measured averages.
• Market context: macro news and index flows can swamp firm‑specific effects.

Given these limits, treat findings about average post‑earnings rises as descriptive observations, not prescriptive trading rules.

Research methods used in studies

Researchers use several standard approaches to study earnings impacts:

• Event studies: measure abnormal returns over event windows (e.g., day‑0, day+1) relative to benchmarks.
• High‑frequency jump tests: detect discrete jumps in prices around release times while controlling for microstructure noise.
• Cross‑sectional regressions: relate surprise size (earnings surprise, guidance revisions) to returns and volatility.
• Robustness checks: filtering for liquidity, excluding confounding corporate events, and using out‑of‑sample tests.

These methods underpin the academic and practitioner conclusions summarized earlier.

Practical guidance for practitioners

If you’re asking “do stocks rise after earnings” because you’re considering trading, here are concise, practical tips:

• Check consensus expectations: quantify the expected EPS and revenue and the dispersion of estimates.
• Assess liquidity and after‑hours risk: expect wider spreads and possible opening gaps.
• Monitor implied volatility: options become more expensive going into earnings; plan around the expected vol crush.
• Use position sizing and stop discipline: unpredictable jumps mean larger-than‑normal risk per event.
• Prefer evidence‑backed rules: backtest any earnings‑based strategy on realistic cost assumptions.
• When using derivatives, practice with simulated trades before real capital.

And if you trade on a centralized exchange, consider a platform you trust for execution and risk controls — platforms like Bitget are built for active traders and offer trading tools and wallet support for digital asset investors who also follow equities news.

Open questions and avenues for future research

Key open issues remain:

• Microstructure evolution: as trading moves faster and liquidity provisions change, the shape of post‑earnings reactions may evolve.
• Latency and algorithmic effects: algorithmic traders and news‑scraping systems may alter the timing and magnitude of immediate reactions.
• Cross‑market spillovers: how equity earnings interact with fixed income, FX, and derivatives markets is an active research area.
• Guidance and narrative: measuring the informational content of management commentary (not just numbers) remains challenging.

These questions shape the frontier of academic and industry inquiry about earnings and price formation.

References and further reading

Key sources used to assemble this guide (selective list; no external links included):

• Journal of Financial Economics — research on jumps after earnings announcements (JFE article summarized by UC San Diego’s Rady School).
• NBER digest — coverage of earnings announcement effects on stock returns.
• Goldman Sachs / sell‑side research summaries reporting average earnings‑window returns for large samples.
• Investopedia and CNBC pieces explaining how specific earnings (e.g., major tech reports) drove large stock moves.
• IG Academy — educational content on corporate earnings and trading behavior.
• Charles Schwab — practical guidance on trading options around earnings (implied volatility dynamics).
• Zacks — resources on earnings surprises and stock reactions.

As of January 22, 2026, market news sources also reported broad market sessions where major US indices closed higher, underpinned by resilient corporate earnings and moderating inflation — a useful macro backdrop when interpreting aggregate earnings reactions.

Further reading of the primary academic papers (JFE, NBER) is recommended for readers who want technical details on jump tests and event‑study methodology.

Practical checklist: before you trade an earnings event

• Confirm the earnings release time (pre‑market, after‑hours).
• Check consensus EPS and revenue expectations, and the dispersion of analyst estimates.
• Review recent guidance and prior quarter surprises.
• Evaluate liquidity (average daily volume, quoted spreads) and whether you can tolerate a gap at open.
• For options: inspect implied volatility levels and the expected IV move priced into near‑dated options.
• Size positions to absorb negative surprises and set clear stop rules.

Final notes and how Bitget fits in

If you monitor markets across asset classes or trade derivatives, integrate earnings calendars with execution capabilities. For traders who also operate in digital assets and need wallet support, Bitget Wallet and Bitget’s trading platform provide integrated tools and order types that can help manage event risk and execution. Remember: this article is informational — not trading advice. Always do your own research and consider professional counsel when in doubt.

Further explore Bitget’s educational materials and market‑monitoring tools to track earnings calendars and volatility — this can help you move from asking “do stocks rise after earnings” to applying disciplined, evidence‑based decisions around scheduled events.

(Disclaimer: This article summarizes public research and market commentary. It is not individualized investment advice. Historical patterns do not guarantee future results.)