News is is an important factor when it comes to investing. A positive press release will create buying interest in a stock, while a negative one can certainly have the opposite effect. In general, news will drive the stock either way on a short-term basis, with the company’s overall performance being the deciding factor over the long term. That being said, it is still true that if news is catastrophically bad or amazingly good, the stock can move dramatically in as little as a few minutes.

To counteract the effects of these large, sudden movements, trading halts are enacted. A trading halt basically halts trading in the stock, pending the public release of important news. This way, everyone will know at the same time how the CEO embezzled money to pay for his $250,000 cigar cutter, which allows shareholders to act at the same time as company insiders.