The stock market is a marketplace where buyers and sellers come together to buy and sell shares in companies. Share prices are driven by supply and demand – if more people want to buy a share than sell it then the price rises. It is not always easy to understand why stocks go up and down, but the clue is in the name – the stock market.
The biggest drivers of a markets performance are economic news events and company earnings. For example, some data might be released that shows unemployment has fallen which could make investors feel more confident about business prospects. Alternatively, some data may be released that indicates consumer confidence has fallen which could make investors nervous that businesses will see a decline in sales.
Companies that are listed on the stock market are required to publish financial results and trading updates. These reports are important for investors as they give an insight into how well a company is performing. Positive announcements will drive the share price up, whilst negative news will push the share price down.
The markets rallied on Friday as Jerome Powell signaled high stock prices but this faded early today ahead of a big week for earnings and data. Rates moved higher this week with the curve flattening while Growth outperformed Value this week. Next week we move into the home stretch with month and quarter-end and key economic data on jobs, GDP and inflation.