What Are the Components of the Stock Market?

Question: What Are the Components of the Stock Market?

Answer: The broader definition of the stock market includes several different stock exchanges, including the Dow Jones Averages, NASDAQ, and the NYSE as well as the commodity and bond markets. By following these averages and exchanges, you can get a pretty good indication of how the stock market investors think the economy is doing.

If investors think the economy is growing, then the they will invest in stocks, since a strong economy helps companies improve their earnings.

If investors think the economy is slowing or stagnant, they will invest in bonds, which are a safer investment. If investors are unsure, or if there are threats in the global economy, they tend to invest in gold and other hard commodities. Keep in mind that these are general trends, not hard and fast rules, which is what makes learning about the stock market so much fun!