Final answer:
The stock market's performance is typically tracked using indices like DJIA, S&P 500, and Wilshire 5000. Factors affecting stock prices include economic data, market sentiment, and global events. Portfolio diversification is important to manage risk, and investing decisions should be based on individual financial goals and market analysis.
Step-by-step explanation:
Overview of the Stock Market Performance
The stock market performance can be gauged through indices such as the Dow Jones Industrial Average (DJIA), which reflects the stock prices of 30 major U.S. companies, and the Standard & Poor's 500 (S&P 500), which includes 500 of the largest U.S. companies. The Wilshire 5000 is another measure that tracks the stock prices of nearly all public U.S. companies. How the market is currently performing, causes of fluctuations, threats of crashes, and investment wisdom are all points of consideration for investors.
To purchase stocks, someone can approach brokers, use online trading platforms, or participate via direct stock purchase plans offered by some companies. When investing, it's crucial to diversify your portfolio to spread risk and potentially reduce the impact of a poor performance of a single stock or sector.
Major Causes of Stock Price Fluctuations
Stock prices can rise and fall suddenly due to factors like economic data, earnings reports, political events, market sentiment, and global economic trends. When it comes to investing, one should be mindful of such factors. Whether to invest and particularly in which industries depends on thorough analysis and personal financial goals.
Two major stock markets include the New York Stock Exchange (NYSE) and the Nasdaq. Regional exchanges like the Chicago Stock Exchange and global ones like the London Stock Exchange are also key players. The OTC or over-the-counter market refers to trading that occurs directly between parties, such as the Nasdaq OTC Bulletin Board.
A bull market signifies a period of rising stock prices, while a bear market indicates falling prices. Understanding the difference between a spot market, where assets are traded for immediate delivery, and a futures market, where contracts are made to buy or sell assets at a future date, is essential for potential investors.