The stock market is a vast network of buyers and sellers trading shares of public companies—known as stocks—with one another. When people want to buy stocks, they make bids that are like offers to purchase the shares at a certain price. When others want to sell shares, they make asks that are like offers to sell the shares at a specific price. Changes in supply and demand push the prices of individual stocks up or down throughout the day. The overall movements of the markets can be tracked by market indices that include the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite.
Markets started the week with a positive tone, supported by lower interest rates and strength in international indexes. But a broad rally faded early today as investors turned attention to key earnings reports and economic data including inflation trends.
Disappointing earnings, elevated unemployment and market uncertainty are some of the factors driving stocks down today. The combination of these concerns is causing investors to reassess their profit growth forecasts for the economy, lowering current stock valuations.
The stock market is a complex beast, and understanding how it works can help you make smart investment decisions. In 2023, most of the underlying forces that drive stock prices—like supply and demand, current events, economic reports and investor sentiment—remain unchanged from previous years. But there are always new factors that can influence the markets, and it’s important to stay on top of them.
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