what are the factors affect the stock market price?

Factors That Affect The Stock Market: The Only 2 Things That Drive The Markets
By Dr. Steve Sjuggerud, Advisory Panelist, Investment U

There's such a glut of information these days: monthly investment magazines covering the markets... daily investment newspapers doing the same... and minute-by-minute coverage on CNBC. They're all trying to tell you what's driving the stock market, and they all love to tell you where the market is going to go. And much of the time, they're wrong! It's enough to drive you crazy!

I'm going to make your life a lot easier. Of all the factors that affect the stock market, only two things drive the markets. And you don't need to check in on CNBC, newspapers or magazines to follow them. Just two things drive the markets; I call them The Two "E's."

The Two E's... And How They Affect The Stock Market

The first "E" you can probably guess. The second "E" you probably wouldn't guess right away, but it's equally important... and it's much less talked about. Since that's the case, we'll spend a little more time on the second "E" today...

The first "E" is earnings. Everyone talks about this "E," and it is extremely important. The big question here is: What is the stock price in relation to the company's earnings? That tells you, in general, whether a stock is cheap or expensive. This is what we need to know... and the information is easy to find.

In my research, I've found that, throughout history, you don't make money in the stock market when the price-to-earnings ratio of the 500 biggest companies in America is above 17. Today, that number is... gulp... about 40. (You can follow this number at http://www.spglobal.com/earnings.html; use the "as reported" number.)

What you need to realize here is that, unless stocks fall by over 50% - or unless earnings more than double - you don't even need to check in with this number. You know that stocks are expensive in relation to their earnings, and will be for a while. Just remember, history tells us we don't make money in stocks when the price-to-earnings ratio of the market is above 17. I won't say more here because so much is said and written on the topic of earnings in the mainstream financial press already.

The Second Factor that Drives the Markets Is EMOTIONS

Emotions are a huge part of investing. Do you think it was earnings that drove the Nasdaq from 1,500 to 5,000, and then back to 1,500, all in four years time? Did earnings get 200%+ better? And then 70% worse? No. Was the Crash of '29, where stocks ultimately fell by 89%, due to earnings? No. Emotions played a big part in both of those examples.

Human beings, with both rational and emotional urges, are the market players. And the thing is, those emotional urges can (and do) often overtake the rational side.

Instead of explaining this at great length, it's better if you just read my "10 Stages Of The Stock Market" below and figure out where we are right now. This "10 Stages" model is a tool for measuring the "emotional state" of the market today.

What are your friends and neighbors saying about the stock market? Ask them. Then figure out which quote below best sums up all their emotions. By doing this, you'll know exactly where we are in the stock market. Of course, you'll want to be a buyer somewhere around the end of the bear market and the beginning of the bull market.

Please read these "10 Stages," and think about where you think we are now. When you do this, you'll know where we are in this market.
http://www.investmentu.com/IUEL/2002/20020620.html

interest rates trend-- economy growth, world economy
capital flow--from bond market/commodity market to stock market or vice versa
social stability--war, natural diaster, epidemic
population growth
credibility of company/auditor's report
government's new measure/rule
investors' emotion

1. Company announcement
2. FUND manager reports
3. Worldwide economic
4. Investors " change horse"