Many would argue that what drives the stock market is what is going on in the news or at the White House. This is only minutely correct in relation to all the other factors that drive the market. Yes, the stock market reacts to announcements with fluctuations in the market that are short lived…
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Although the political world affects the stock market in the short term the market recovers quickly.
What drives the stock market the most are interest rates, inflation, and corporate profits. Interest rates are set by the Federal Reserve. Federal policy is set through the raising or lowering of interest rates. Interest rates help dictate the demand for goods and services. This in turn affects corporate profits and inflation. Interest rates set by business and industry are set according to what people believe the Federal Reserve will set long term interest rates at. This forecasting of interest rates is driven by what the Federal Reserve is projected to do in the future. High interest rates alter borrowing costs. This has the effect of changing the availability of bank loans and household wealth. Lastly, interest rates affect foreign exchange rates (Federal Reserve San Francisco).
Corporate profits drive the stock market either up or down depending upon whether corporations have a gain or a loss. Large corporate profits give corporations more to spend or reinvest in the corporation. The gains are passed on to investors through increase in value of the company's stocks and larger dividends. Most dividends are reinvested into the corporation thus increasing growth potential of the corporation. Corporate losses have the opposite affect. Losses are passed on to corporate stock holders in the form of decreased stock value and lower dividend payments. What also drives stock prices is corporate reporting. A corporation that has had a positive growth fiscal year tends to prompt a rise in the value of its stock. Likewise fiscal reporting that falls short of forecasts has the effect of lowering stock value. In addition to reporting results, a corporation's non-compliance with reporting requirements or late reporting has the affect of lowering its stock value. Mainly, this is because non-compliance is most associated with problems within the organization or reports of an external investigation by the SEC (Securities and Exchange Commission).
Corporate earnings have the trickle down affect of the raising or lowering of purchasing power of its stockholders and employees. Employees often benefit from owning company stock through a corporate stock option program that awards stock to employees as retirement compensation. A company seeing losses passes that loss of value on to its employees by lowering of the stock price. This has the affect of lowering the value of the employee's retirement plan. A win-win situation would be employees working hard to assist the corporation in making profits because both the corporation and the employees benefit from higher stock values.
As long as corporations and individuals have buying power they will exercise that power by purchasing more stocks. That, in affect, gives the corporation more money to spend on operations that make money for the corporation. Thus stock market values rise (Bull market). The inverse lowers stock values and reinvestment and the stock market experiences a bear market.
Lastly, a war has an interesting affect on the stock market. Initially, the announcement of a conflict serves to drive the market downward. But, once war production begins and corporations begin to make money because of the conflict the stock market is driven up.
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(“Stock Market Cycles Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
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(Stock Market Cycles Essay Example | Topics and Well Written Essays - 750 Words)
“Stock Market Cycles Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1512269-stock-market-cycles.
GOLD - Randgold Resources Ltd. These companies represent a diversified trading strategy with stocks in the consumer retail sector focusing on small business and home enterprise growth in a recovery economy, Chinese biotechnology for rapid growth potential, the NASDAQ giant and tech-sector leader Apple with the dynamic iPhone, iPad, and iOS lines internationally, and one of the largest miners in the world in Randgold.
Name: Instructor: Course: Date: Stock market summary essay Introduction This essay seeks to relay to the reader a comprehensive summary of a stock market case. The case involves an investor who has $1 million and seeks to invest in various stocks of his choice.
The stock market can be very profitable but can also lead to losses. The stock market is very profitable creating a lot of interest to many people and though it may result in losses, there is a lot of benefit to the institutions selling their stocks, the individual that buy it and the governments of the various countries, making it one of the most popular earners.
These fluctuations are usually measured by the real gross domestic product (GDP). One of the policy makers' main roles is to smooth out the business cycle and to reduce its fluctuations by narrowing the margin between the stages of growth and decline.
The term "cycle" can be rather misleading as business cycles don't tend to repeat regularly in time.
The previous trends of Motorola shares shows that it would be profitable to invest in these shares, according to a 2006 report 0n profits the companies profit level has increased by 198.8% compared to the year 2004.2
The revenue revel according the 2006 report amounted to 36,843 million pounds; this revenue level has grown by 4.2% from the year 2004, in this year profit levels amounted to 4,578 million pounds with an increase of 198.8% from the year 2004.
Commodities are traded in commodities markets, with derivatives are traded in a diversity of markets. The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' is estimated at about $51 trillion. The world derivatives market has been estimated at about $480 trillion 'face' or nominal value, 30 times the size of the U.S.
The machinery growth rate is only a small 5% per year. This is really very slow. But the construction industry is tied up to the economy (Samuelson,1973).
The construction machinery industry included such products as power cranes, dragline, and excavators.
If a person uses such information to buy or sell a company’s shares in the stock market this could amount to insider trading and which is a highly prosecutable criminal offence in the UK. (moneyextra.com, 2007)
For fair treatment of
This uncertainty is related with their short and long term future state. This characteristic is disagreeable for the investor while it is also inevitable whenever the stock market is selected as an investment tool.
This study “Testing the
In this regard, Tenpin has to dispose some of its shares to the public.
In essence, the company has to put into consideration vital factors that dictate its move to make it a public company. These include choice, access to capital,
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