Why Markets & Market Returns Fluctuate

Markets fluctuate on a daily basis

Stock market returns are not static and fluctuate constantly. Even from day-to-day, returns vary on stocks. Everyday, there are happenings in the world that impact market returns.

State of Economy and Expectations

Market returns are tied to the state of the economy. In a booming economy, returns tend to move up on the whole. And in a down economy, returns tend to move down. Investor expectations relating to the economy also play a role.

Economic News

News that points to the performance of the economy also impacts market returns. Economic data released by the government provide a picture about how the economy is doing. This influences market returns.

Company News

Earnings reports and other news impacting individual companies also influence market sentiment. Investors tend to drive up stock prices on good earnings reports, driving up the market.

Investor Sentiment

When investors are in high spirits, they tend to bid up the prices of stocks. This means market returns move up too. And when investors are not in the best of spirits, there is a negative impact on market returns.

Government Regulation

When government passes regulations that could influence the performance of certain industries or companies, investors take note. If they feel the regulations will have a negative impact, they tend to sell their stocks. This negatively impacts market returns.