Influences
-
Influences on the Stock Market
A number of factors contribute to the minute-to-minute changes in a stock’s price.
- Market forces such as supply and demand impact share prices.
- News events working in conjunction with public opinion also play a role in creating rises and dips in stock prices.
- Reports on internal corporate activity, industry trends, and national/international events (e.g. political, social and scientific news) are interpreted as either “good” or “bad” news by the public, who in turn determine whether a company is a good investment or not.
- P/E ratios and projected earnings help investors place a value on a stock.
- Public companies must report their earnings four times a year (once each quarter). “Wall Street” carefully watches earnings results. Analysts base their opinions about future value of a company on its earnings projections. If a company's results are better than analysts expected, the stock price rises. If a company's results are worse than expected the stock price falls.