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Economic Indicators' Impact on Different Stock Categories
Finance & Accounting
Pages 25 (6275 words)
The release of data pertaining to economic indicators is always eagerly awaited by investors. These indicators include unemployment, consumer price index and inflation, and even housing starts. Central bank changes in interest rates are also anxious moments for stock market investors.
While every indicator is an important measure of a facet of the economy, do all of them influence the stock markets equally? Hence the importance to know is which of these indicators influence the stock markets most, and probably more importantly which economic indicators most influence which types of stocks. For an investor, knowing which key economic affect the stock prices most can be of paramount importance, especially if they are in the stock market for the short-term. Different families of stocks provide different returns, which means that different investors, based on their appetite for risk, will opt for different investment strategies for which type of stocks to keep in their investment portfolio. This means that a “one-size fits all' theory on economic indicators affecting the stock prices may not be particularly relevant. Hence the need to identify whether (or not) the same set of economic indicators similarly influence the stock prices of small cap stocks as for large cap stocks. ...
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