Understanding some of the causes behind the swings of the market may help you better tolerate the short term movements and remain focused on the long term potential. Investor trading activity. The basic economic concept of supply and demand plays a role in stock market activity. When investors buy shares, prices usually rise with the demand. Conversely, prices tend to fall when investors sell and the supply of available shares grows.
Interest rates are just one aspect of the economy that can affect stock prices.
People may borrow and spend less, and they may move money out of stocks into high yielding, fixed income investments. The global marketplace . Many U.S. firms export to other countries, compete in the United States with foreign businesses use foreign parts and labor, or have some other link to international markets. Fluctuations are inherent in stocks, but stocks also offer greater return potential than other investments. Let's discuss the role that stocks may play in your investment program.