There are many ways to invest your money but one of the most popular is investing in a company called a stock. What makes a stock different from other investments is that it is traded on a market called a stock exchange. There are several types of exchanges but most focus on trading securities like stocks and bonds.
The stock market continues to grind higher this week despite heightened concerns about a slowing economy, weakening earnings, and the trade war. The Dow, S&P 500 and Nasdaq are now just a stone’s throw from all-time highs. On the earnings front analysts haven’t raised their expectations for overall S&P 500 EPS growth and some have actually lowered them, an unusual and potentially nerve-wracking dichotomy.
A number of events could rattle markets this week including a Fed meeting, back-to-school and holiday shopping, the July Producer Price Index and expected earnings from Conagra (CAG), Delta Airlines (DAL) and JB Hunt Transport Services (JBHT). Investors should also be aware of the August 1st deadline for the US to reach a deal with Japan or face a trade war that could see tariffs increased to 25% from 15%.
What causes stocks to rise and fall? There are lots of theories but the most basic is that prices change based on supply and demand. If more people want to buy a stock than sell it then the price will move up. If fewer people want to buy it then the price will decline.