Contagious Speculation and a Cure for Cancer: A Nonevent that Made Stock Prices Soar

TLDR

A cancer‑curing breakthrough had been reported in *Nature* and popular media more than five months earlier. A New York Times article falsely claimed a cancer cure, causing EntreMed’s stock to jump from $12 to $85 and remain above $30 for weeks, boosting other biotech shares despite no new data.

Abstract

ABSTRACT A Sunday New York Times article on a potential development of new cancer‐curing drugs caused EntreMed's stock price to rise from 12.063 at the Friday close, to open at 85 and close near 52 on Monday. It closed above 30 in the three following weeks. The enthusiasm spilled over to other biotechnology stocks. The potential breakthrough in cancer research already had been reported, however, in the journal Nature , and in various popular newspapers (including the Times ) more than five months earlier. Thus, enthusiastic public attention induced a permanent rise in share prices, even though no genuinely new information had been presented.