Recall Huberman, Gur, and Tomer Regev. Contagious Speculation and a Cure for Cancer: A Nonevent that Made Stock Prices Soar, Journal of Finance, 2001. The paper finds that both ENMDs stock price and biotechnology index increased tremendously following a New York Times article covering the breakthrough of ENMDs cancer research. However, this breakthrough had been already covered by an article in Nature six months before the NY Times article was published. The authors conclude that the stock market violates the efficient market hypothesis because the whole biological index reacts positively to stale information.

8. Which price reaction to the New York Times article is the evidence contradicting the efficient market hypothesis? The ENMDs stock price reaction or the biotechnology index price reaction? Explain your answer