Factors that can contribute to fluctuations in the stock market and vice versa

We have always been thought that any fluctuations albeit even the smallest one can have a very big impact on the overall economy of the country. Have you ever thought about the repercussions that the changes in the stock market can have on the society as a whole?

There are many reasons that can be attributed to the fluctuations in the stock market. In the same vein, the fluctuations in the stock market can also be responsible for changes in the individual business. Let us see some of the factors that can be attributed to the company which can lead to fluctuations in its stock prices. The impact of the following can be positive or negative depending on case to case.

  1. News releases from the management about anything that has a direct bearing on the bottom line of the company;
  2. Announcement and distribution of dividends;
  3. Launching of new product or introduction of a new service;
  4. Signing on a dotted line of a very prestigious contract;
  5. Layoffs, attrition or downsizing of staff;
  6. Any news about pending mergers, acquisitions or change of management;
  7. Any scandals uncovered or past skeletons that fall off from the wardrobes, etc.

The question that a lot of people have on their mind is doing the impact of a company’s stock affect others in the same industry. The answer to this question is self-explanatory. It has often been noticed that when the stock market fluctuations happen and they impact a company the entire industry is affected simultaneously. The company and its impact cannot be viewed in isolation.

The public sentiment:

  1. The bull market:

The general sentiment of the public determines greatly the way the companies perform during a stock market fluctuation. If the stock prices are rising and the market is bullish, there is a positive sentiment in the public and subsequently, the purchasing power of the people is on the rise because of the sentiment that they have become rich due to the notional increase in the value of the stocks that they are holding. This infuses a positive air in the market and like a circle, the economy is more of a recovery mode, especially if there is a recession lately.

  1. The bear market:

The opposite happens when the market is bearish. Investors and consumers have a pessimistic attitude and they shy away from spending or investing their money in goods and services and rather park it in savings accounts, this result in further stagnation of the markets.

Political reasons:

The political conditions of a place can also have an effect on the stock market which also influences the way the companies are affected. If there is a violent change in the government or even during elections, threes a high chance of market fluctuations which can affect businesses too even if for a shorter period of time.