Although the industry took some steps to clean up its act, it seems fewer investors buy and sell individual stocks based solely on analyst recommendations. However, there is no doubt analyst upgrades and downgrades still influence individual stocks. Home Depot (HD) jumped 6.74 percent on June 20 after brokerage firm Stifel Nicolaus upgraded it from "hold" to "buy." Similarly, Pfizer (PFE) plunged 15.65 percent on Dec. 4, 2006 after JP Morgan and Deutsche Bank downgraded it from "overweight" to "underweight" and "neutral," respectively. Are these moves representative of how most stocks respond to rating changes?

The following study examines how the 30 stocks in the Dow Jones Industrial Average (DJIA) behaved intraday and in the two weeks after analyst upgrades and downgrades.