Mall fights reported across the country the day after Christmas. Upper-class men get the best law jobs in the country. Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about a. Also follow MarketWatch on Twitter and Facebook. A modest wobble aside, unexpectedly strong inflation readings aren't rattling stock-market investors.
That might not happen until the Fed changes its tune, analysts say. Home Markets U. All stock market moves have one thing in common. The catalyst is a change in the supply and demand for stocks. For any market move to occur, whether up or down, there must be a significant change in supply and demand.
The demand to own shares created by long investors is met with supply created by sellers closing out positions or shorts. Rising interest rates can place downward pressure on real estate investment trusts REITs and slow the housing market.
Higher interest rates mean higher borrowing costs slowing down purchasing activity and causing stock prices to dive. Changes in tax regulations, such as the recent Tax Cuts and Jobs Act TCJA of , have largely had a positive effect on stock movements, as investors and corporations have more resources to spend on stocks.
Tax increases, on the other hand, typically mean that investors have less money to put into the stock market, which has a negative effect on prices - or that firms have less money leftover as profits. Simply put, supply is the number of shares people want to sell, and demand is the number of shares people are looking to buy.
When there is a difference between these two groups, the prices in the market move; the greater the disparity between demand and supply, the more significant the move will be. The reason for the higher share price is an increase in the number of people looking to buy this stock. This difference between the supply and demand of a stock causes the share price to rise until an equilibrium is reached.
Remember that in this case, more people are looking to buy shares than sell them. As a result, buyers need to bid the price of the shares higher to entice the sellers to part with them. After all, the stock market itself is just a collection of individual companies.
The DJIA traded down because of increased uncertainty concerning the future, including the possibility of more terrorist attacks or even a war.
This uncertainty caused more people to get out of the stock market than into it, and stock prices plummeted in response to the large decrease in demand. Investing Essentials. Your Privacy Rights.
To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. Buy the consumer. Equities are benefiting from the unwinding of the momentum trade in fixed income and reach for yield, but a strong dollar will act as a ceiling for earnings and will tighten liquidity conditions.
However, the resiliency of US companies has proven itself time and time again throughout this bull market, and investors should avoid trying to time the market, in our view. The time in between inauguration and tax cuts is risky; waiting for stimulus when rates and FX markets reflect such will cap stocks.
Comment: "We think that, fundamentally, risks for equities in are likely to be higher compared to this year," said Dubravko Lakos-Bujas. Stronger USD and higher rates are main sources of downside risk for corporate earnings and the equity multiple, especially if those trends are not supported by stronger growth expectations.
Comment: "Our expectations are for tailwinds for the equity market stateside as elements of the stimulative fiscal agenda broadly outlined by President-elect Donald Trump are implemented," John Stoltzfus wrote. That said, we believe that the effects of the stimulus agenda are not likely to be felt in the economy until such fiscal policies are enacted and are given some time to take effect. For you. World globe An icon of the world globe, indicating different international options.
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