The stock market is a central hub for companies to raise money and investors to potentially make a profit. It’s also a reflection of the overall economic mood: During times of prosperity, stocks are higher and during crises, they’re lower. The SEC and state agencies oversee the markets.
The price of a company’s shares fluctuates based on demand and supply. If lots of investors want to buy a particular stock, the stock’s price will rise which in turn entices existing shareholders to sell at a higher price. Factors such as a company’s quarterly earnings reports, economic trends at home and abroad and specific news stories can affect price movements.
Investors like you can purchase or sell shares on a public exchange like NYSE and Nasdaq or privately through a brokerage account. The exchanges act as matchmakers to pair buyers and sellers at transparent prices. Sellers may include companies offering their shares for the first time in an initial public offering (IPO), or individuals reselling shares they’ve previously purchased.
Macroeconomic trends like interest rates and inflation, political events and natural disasters both here and abroad play a big role in how the markets move. The stock market is global and what happens in one corner of the world soon reaches the other. Rules and regulations are in place to ensure fair trading practices, protect investors, and promote confidence in the market.