Stock prices are constantly affected by supply and demand in the stock markets. The prices go up and down, and these fluctuations are dependable on the news and the overall supply and demand.
When more people want to buy a stock, the price goes up, and when more people want to sell the stock, the market price goes down. This is a proven mechanism of making the market sustainable in the long run.
Stock market fluctuations depend on the news, and that is why the investment in stocks has a correlation with the news that we read every day.
The relationship between supply and demand is sensitive to the relevant news, and every investor should be aware of this fact.
How News Affect the Stocks
For example, if Microsoft announced that their earnings increased over the one-year period, that is the good news. If Wall Street expects even a better increase, the price of the stock can fall.
At the same time, the investors may decide to buy a stock because they believe the price is below the real price. This situation will make the share price go up, and the investors might anticipate the sales will be even better in the current quarter.
A few moments later, there might be a report that says that sales are going down in the entire tech sector. The stocks of all tech companies might go down, including the Microsoft stocks.
This is how stock market news affects the prices of the stocks in the market. For this reason, we can see how so-called conservative stock pickers decide to apply the buy-and-hold solution.
They buy the stocks and prefer to keep the stocks in the long run. Over time, the stock price will increase and the stock owners will see better outcomes. They are not affected by the temporary news and they decide to leave the stock intact over longer periods of time.
What Is the Difference Between Bad News and Good News
There are many bad news examples when it comes to stock markets. There might be a bad earnings report, trouble in corporate governance, some political and economic problems, or bad occurrences that describe the bad news about the company.
Negative news will result in selling the stocks, and this can leave a negative impact on a company that is already facing a bad situation.
On the other side, we have good news that results in buying the stocks. Good news can come in the form of a positive financial report, an introduction of a new product, or a corporate acquisition.
There is also news in the form of positive economic indicators that translate into an increase in a stock price. The good news will make people buy stocks and this will create a solid ground for a company’s success in the market.
How to Anticipate Stocks Market News
Professional traders always try to anticipate the next news cycle, which allows them to predict the stock market values. They use different sources of information to anticipate the news, and some of these sources are government economic news, industry news, and gossip.
All of these news sources reveal to the traders the actual situation with the company in the stock market. News for investors should be clear and straightforward. In this manner, the investors can have a better picture of the company stocks they invest their money in.
The stock prices depend on the stock market news in a huge amount. For this reason, all investors should be aware of the actual situation in the relevant companies. By reading the news, we can have a clearer picture of the investment that we want to make. This is a sure way to invest smarter and in a more effective way.
