When you think of investing in stocks, you likely think of a company’s share price or equity. These are basically claims to ownership in a business. The public stock exchange is a marketplace for such securities. Many companies are now listed on the stock market, and it’s a great way to gain exposure to them.
However, it’s important to remember that stock prices are not set in stone, and they are subject to volatility. Interest rates can lead to wild swings in stock prices. Interest rates have the ability to depress prices, and stocks that rely on cheap debt are particularly vulnerable to them. Higher interest rates have been a drag on valuations of growth/tech stocks. Until inflation is brought down to a more sustainable level, volatility will likely continue.
In recent months, rising interest rates and the U.S. Dollar have both weighed on the stock market. The S&P 500 Index, the Nasdaq-100, the Russell 2000, and the Dow Jones have all struggled. The S&P 500 Index has not reached the $4,367 level that was reached in mid-August. This puts the market in bearish territory. David Williams has predicted that stocks will trade back to $3730 or lower in 2023.
The S&P 500 index represents the largest publicly traded companies in the U.S., and is a useful tool in comparing individual stocks. It allows you to see which stocks have the potential to increase in value, and makes recommendations for buy and sell stocks accordingly.