This whole process, from choosing a topic to visiting CNBC, has been leading to my final answer to my main inquiry question. What top factors impact the stock market? Answering my main inquiry question is really important because my answer is my script for my final presentation.
This is it:
Have you ever seen a stock chart? A stock chart is a chart of different companies that shows how well they’re doing. When you look at a stock chart, you will see that the numbers are either green or red, the stocks are either up or down. Do you know what makes the stocks go up and down? Well, there are many different factors that could impact the stock market. Some of the top factors are, a company’s performance, an industry’s performance, and different political factors. A company’s performance can impact the price of its stock, and the price of its competitor’s stock. An industry’s performance can impact the price of the stocks in that industry and the price of the stocks in its competitor’s industry. Different political factors can impact the whole market, but in different ways.
A company’s performance can impact its stock and other stocks, for example, earnings results and the release of new products. A company’s earnings results can impact its stock depending on the comparison of the estimate to the result. If the company’s results are better than expected, then usually, their stock price will go up. If the company’s results are worse than expected, then usually, their stock price will go down. For example, on May 16, “Macy’s’s” 2018 earnings results were released. Analysts expected the earnings per share to be 37 cents up. Instead, the earnings per share were 48 cents up. According to Investor Place, on that day, Macy’s stock (M) was up 12%. This shows how a company’s earnings results, in this case a good one, can impact the company’s stock price. Also, on May 1, SnapChat’s 2018 earnings results were released. Analysts expected the earnings per share to be 16 cents down. Instead, the earnings per share were 17 cents down. According to the Los Angeles Times, on that day, SnapChat’s stock (SNAP) was down 16%. This shows how a company’s earnings results, in this case a bad one, can impact that company’s stock price.
The release of new products also can impact a company’s stock price. When companies in the same industry are competing for the same market, and a company comes out with a great new product, then the other companies will not do as well, there stock will be down more. For example, the “sneaker war” between Nike and Adidas. According to Markets Insider, Nike’s sneakers have dominated the top 10 selling shoes. They gained much of that success from the popularity of Nike’s Air VaporMax, as well as its Air VaporMax Plus. 80% of the retailers said, the brand first indicated as strongest in running was Nike. On the other hand, only 15% of the retailers said that Adidas was the first brand indicated as strongest in running. Ultraboost and NMD didn’t help with the price of Adidas’ stock. This shows how two companies, in this case Nike and Adidas, are trying to be the best with their new products. At the end of the battle, there is a winner, in this case, Nike.
An industry’s performance can impact the stocks in that industry and stocks in other industries. This is because, market conditions generally impact companies in the same industry in the same way. For example, the airline industry. If you look at a chart comparing different airline stocks, you will see how together the lines move. One thing that may impact airlines, is a bad storm. From August 17 to September 3, according to CNBC, more than 10,000 flights were cancelled due to Hurricane Harvey after flooding in Houston. This caused United Airlines to lose 400 million dollars. Also, from August 30 to September 13, Hurricane Irma caused the cancelling of more than 14,000 flights, 10,000 of those in Florida. During this period of hurricanes, the airline industry was from 8% to 20% down. This shows how industries, in this case the airline industry, can be impacted in similar ways and by similar things, in this case the stocks being down and because of hurricanes.
The retail industry is also impacted in the same way. For example, when everyone started shopping online, especially when Amazon was doing really well, the retail industry wasn’t doing so well because no one went to stores anymore. Online shopping has done well for a long time in media and entertainment categories, like books and music. Also, easy return policies have made online shopping cheap, easy, and risk-free for consumers. According to The Atlantic, at the time, the retail stocks were 1% to 25% down. This shows how industries, in this case the retail industry, can be impacted in similar ways and by similar things, in this case the stocks being down and because of online shopping.
Different political factors can impact the whole market, but in different ways, for example, elections and terrorism. The market is usually up before the election, and usually up less during the election. In the last year of the president’s second term, the stock market is usually down. From 1833 to 2016, according to Kiplinger, the Dow Jones Industrial Average (a primary indicator of the market) gained an average of 10.4% in the year before the election, and nearly 6%, on average, in the election year. Also, in 2008 in George W. Bush’s last term, the market was down about 41%. This shows how elections can impact the stock market, in this case the presidential election.
Terrorism can also impact the stock market. This is because terrorist attacks lead investors to panic and pull their money out of the market. For example, the first trading day after the 9/11 attacks in New York and Washington, D.C., according to Bankrate, the Standard & Poor’s 500 index (another major indicator of the market) dropped nearly 5%. Also, on July 15, the day after the attack in Nice, France, that killed more than 80 people at a Bastille Day celebration, S&P was down 0.09%. This shows how terrorism can impact the stock market.
In conclusion, there are many different factors that can affect the stock market. Some of the top factors are, a company’s performance, an industry’s performance, and different political factors. Sometimes the market doesn’t move the way you think it will move based on historical results, but you can make an educated guess.