Why do unrelated stocks usually go up and down together? (trading, cash)

[techcrium]

For example: Today is a red day and most stocks are DOWN. Yesterday was a green day and most stocks were UP

Why is that?

Why is it that Twitter/Facebook is down when Proctor and Gamble/Philip Morris is down and Twitter/Facebook is up when PG/Philip Morris is up?

What relationship does Twitter have with Proctor and Gamble that both go up and down 80% of the time?

[eccotecc]

A rising and receding tide lifts and lowers all ships.

[techcrium]

Originally Posted by eccotecc

A rising tide and a dropping tide lifts and lowers all ships.

How does a rising tide for General Electric help out Twitter?

Say General Electric just produced a new machinery for farms...how does that help increase Twitter users and twitter profits?


Say Twitter acquired a messaging company and a video app company...how does that help increase General Electrics profits?

[LongArm]

Much of stock movement is due to the outlook on the broader market/economy as a whole, not just news affecting each individual company.

[eccotecc]

Originally Posted by techcrium

How does a rising tide for General Electric help out Twitter?

Say General Electric just produced a new machinery for farms...how does that help increase Twitter users and twitter profits?


Say Twitter acquired a messaging company and a video app company...how does that help increase General Electrics profits?

Please allow me to direct you to Investopedia.com. You are looking for a narrow answer to a very broad question.

Investopedia - Educating the world about finance

[viktorka]

Originally Posted by techcrium

For example: Today is a red day and most stocks are DOWN. Yesterday was a green day and most stocks were UP

Why is that?

Why is it that Twitter/Facebook is down when Proctor and Gamble/Philip Morris is down and Twitter/Facebook is up when PG/Philip Morris is up?

What relationship does Twitter have with Proctor and Gamble that both go up and down 80% of the time?

Because majority of stocks follow the market. Because institutional traders ("Big Money") are analyzing not just stocks, they analyze the market - market indexes and they build their trading accordingly. Since they invest a lot of money they mainly move stocks.

[celcius]

Stocks don't "follow the market" because the market itself is just weighted averages of stock prices. If anything it is the reverse, but this is entirely besides the point.

On a day-to-day basis the movements are mostly random and coincidental -- there is nothing to be gained trying to figure out why or how to act on it.

[Larry Siegel]

Because the discount rate used by investors for estimating the fair present value of a set of future cash flows changes every day and affects every stock in the same way. There are other factors, such as specific company news and earnings, but, for example, today when a commercial plane was shot down over Ukraine, global political risk spiked up, so the discount rate, which reflects the overall risk in the market, went up, causing prices to come down pretty uniformly.