Four Major Factors That Affect Stock Prices

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Supply and Demand

Interest rates

Major Factors That Affect Stock Prices

Inflation and deflation Financial Reports


It is difficult to identify specific factors that influence the stock market as a whole, but then there are basic economic principles that can help explain any ups and downs in stock market movements.


Here are the four major factors that impact stock prices.

Supply and Demand The imbalance between supply (the number of shares people want to sell) and demand (the number of shares people want to purchase).

Interest rates In case of lower interest rates, the demand for funds is higher and the subsequent demand for shares rises. When interest rates are raised, it lowers the demand for funds and the demand for shares is lower.

Inflation and deflation Inflation is an increase in the price levels of goods and/or services or an increase in the supply of money, making things more expensive. Deflation means the purchasing power of money increases with lower prices.

Financial Reports Stocks and the stock market can be affected by the hype, which is created by the companies themselves or the release of new products or services.


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