Very frequently, it is observed that the stock’s price keep changing but have you ever thought of the logic behind it. In general, stock market does not move in one single direction. In spite of geopolitical concerns, stretched valuations and an unpredictable president it also goes up. If you want to know why shares keep raising then you are here at the right page of internet.
The logic why the market usually goes in upward direction is discussed in this post. This year the big winning stocks were Amazon.com, Facebook, Apple and Google parent Alphabet. This is the reason why the S&P 500 has risen 11% so far this year, the S&P 500 Growth Index, which is concentrated in companies with strong earnings and revenue growth, has risen 17%. The S&P 500 Value Index that focuses on stocks with lower price-earnings, price-to-sales and price-to-book ratios is up by 4%.
This year, it was found that the 10 biggest stocks in the growth index have increased 26%. It added approximately $900 billion to the S&P 500’s market capitalization that stands at about $23 trillion currently.
According to the experts, the gains for these stocks make sense for two reasons. One is that the investors tend to favor fast-growing companies in the latter stages of an economic expansion that is where the U.S. economy is right now after eight years of growth. The genuine reason for it is harder to generate growth late in the cycle after the easy gains have been made, putting a premium on companies that still exhibit strong profit gains.
Another reason for the gains for these stocks is that many of the big companies leading the rally do a large portion of their business abroad, where many countries are experiencing economic upswings.
To know about such factors, you must get in touch with the analysts of Money Classic Research, who are offering free intraday tips to their premium clients.