How does investor confidence affect stock prices going up or down?
Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall. The general direction that the stock market takes can affect the value of a stock:
- bull market – a strong stock market where stock prices are rising and investor confidence is growing. It’s often tied to economic recovery or an economic boom, as well as investor optimism.
- bear market – a weak market where stock prices are falling and investor confidence is fading. It often happens when an economy is in recession and unemployment is high, with rising prices.
Factors that can influence investor confidence include company news and performance, industry performance, economic factors (e.g. interest rates, inflation, economic outlook, value of the Canadian dollar and changes in economic policy). Learn more about factors that can affect stock prices.