What Causes Stock Market Index Fluctuations?

[jwoodie]

I am specifically interested in stock market index fluctuations related to political events. Who or what triggers significant changes in these markets? Is it computer algorithms or a sudden consensus of investment fund managers? If the former, are they reacting to specific quantitative data? If the latter, are they reacting to subjective expectations such as consumer confidence polls? Also, how does volume correlate to these changes?

Secondly, I am interested in how these markets could be manipulated for political or other purposes. Are there specific trades that could have more impact than others? Also, what happens to the money that is taken out of the market by a sale? Is it automatically invested in corporate or government securities? In either case, doesn't that tend to reduce the value of bonds and interest rates? Isn't that good for the economy?

Thanks for your considered input.

 

[Meister]

I am specifically interested in stock market index fluctuations related to political events. Who or what triggers significant changes in these markets? Is it computer algorithms or a sudden consensus of investment fund managers? If the former, are they reacting to specific quantitative data? If the latter, are they reacting to subjective expectations such as consumer confidence polls? Also, how does volume correlate to these changes?

Secondly, I am interested in how these markets could be manipulated for political or other purposes. Are there specific trades that could have more impact than others? Also, what happens to the money that is taken out of the market by a sale? Is it automatically invested in corporate or government securities? In either case, doesn't that tend to reduce the value of bonds and interest rates? Isn't that good for the economy?

Thanks for your considered input.

Ask Toro about this, He's pretty astute with the markets, more than I am.

 

[1srelluc]

The main thing to remember is that the market is never happy. They are mostly money-grubbing assholes and very flighty....You would think it's run by women at times.

The trick (if you decide to jump in) is to choose the right money-grubbing assholes to make the market work for you.

 

[Admiral Rockwell Tory]

The main thing to remember is that the market is never happy. They are mostly money-grubbing assholes and very flighty....You would think it's run by women at times.

The trick (if you decide to jump in) is to choose the right money-grubbing assholes to make the market work for you.

The stock market is a group of people, about half of which think the market is too high and about half who thinks it should be higher. There is a small group in the middle that shift between the two and influences whether the market goes up or down. No one in the stock market really knows what they are doing and usually just goes with the flow. It is all just a fantasy world anyhow.

 

[excalibur]

The market is computer programs among all the big and medium boys.

 

[Toro]

I am specifically interested in stock market index fluctuations related to political events. Who or what triggers significant changes in these markets? Is it computer algorithms or a sudden consensus of investment fund managers? If the former, are they reacting to specific quantitative data? If the latter, are they reacting to subjective expectations such as consumer confidence polls? Also, how does volume correlate to these changes?

Secondly, I am interested in how these markets could be manipulated for political or other purposes. Are there specific trades that could have more impact than others? Also, what happens to the money that is taken out of the market by a sale? Is it automatically invested in corporate or government securities? In either case, doesn't that tend to reduce the value of bonds and interest rates? Isn't that good for the economy?

Thanks for your considered input.

What you saw today was not a political event. Mostly. What you saw was an economic event.

The micro-structure of the market, ie algo trading, doesn't really matter except perhaps in the very short term. What does matter is the perception of whether or not the US is friendly to foreign capital. Right now, foreigners are voting with their feet. January saw the biggest outflow from foreign sovereign wealth funds by far, with $30 billion going out the door from US stocks.

Tariffs are taxes that increase the cost of production and reduces profits for corporations. When profit expectations fall, so does the market. The tariffs that President Trump imposed were broadly higher than what markets were expecting. Hence, the violent selloff. Polymarket has recession expectations at 50% yesterday, up 10x from a few days ago

I've been mostly in cash in expectation of this. I expect the market will continue to fall though not in a straight line.

 

[jwoodie]

The market is computer programs among all the big and medium boys.

The market always comes back, but the little guys always seem to lose. Do Required Minimum Distributions (RMDs) play a part in this by forcing liquidations during a down market? I wonder if RMDs should be suspended or rolled over until the markets recover?