Stock prices are constantly affected by supply and demand in the stock markets. Prices rise and fall, and these fluctuations depend on news and 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 for making the market sustainable in the long term.
Stock market fluctuations depend on news, which is why investing in stocks correlates with the news we read every day.
The relationship between supply and demand is sensitive to relevant news and every investor should be aware of this.
How news affects stocks
For example, if Microsoft has announced that its earnings have increased over the one-year period, that’s good news. If Wall Street expects an even better rise, the stock’s price could fall.
At the same time, investors can decide to buy a stock because they believe the price is lower than the real price. This situation will drive up the share price and investors may expect sales to be even better in the current quarter.
Moments later, there may be a report that says that sales are dropping across the entire tech sector. Shares of all technology companies could go down, including Microsoft shares.
This is how stock market news affects stock prices 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 hold them for the long term. Over time, the share price will rise and the owners of the shares will see better results. They are not affected by the temporary news and decide to leave the title intact for longer periods of time.
What is the Difference Between Bad News and Good News
There are many examples of bad news when it comes to stock markets. There could be a bad earnings report, problems in corporate governance, some political and economic problems, or negative events that describe the bad news about the company.
Negative news will result in the stock being sold and this can leave a negative impact on a company that is already facing a bad situation.
On the other hand, we have good news which translates into buying stocks. The good news can come in the form of a positive financial report, a new product introduction, or a business acquisition.
News also in the form of positive economic indicators that translate into an increase in the price of a share. The good news will push people to buy stocks and this will create a solid foundation for a company’s success in the market.
How to anticipate the news on the stock market
Professional traders always try to anticipate the next news cycle, which allows them to predict stock market values. They use different sources of information to anticipate the news and some of these sources are government business news, industry news and gossip.
All these news sources reveal to traders the real situation with the company in the stock market. The news for investors should be clear and straightforward. In this way, investors can get a better picture of the shares of the company in which they invest their money.
Stock prices are highly dependent on stock market news. For this reason, all investors should be aware of the real situation in the companies concerned. By reading the news, we can get a clearer picture of the investment we want to make. This is a surefire way to invest smarter and more effectively.