Does some trading take place overnight, maybe internationally? Are there any other factors?
2006-07-07 12:43:52 · 8 answers · asked by Good Lawd 2 in Business & Finance ➔ Investing
The bid/ask can change overnight, as investors change their mind about what a stock is actually worth while the exchanges are closed. The reported price is just the last 'ask' that went through an actual trade. If a value of a stock drops after hours, then the next day, demand for the stock (and therefore the 'ask' price) drops. Thus, the price change.
American stocks do trade overseas (sort of), but the bid/ask there may or may not reflect the bid/ask of domestic exchanges. Stocks tend to reflect foreign trading prices once the market reopens the next day, but there is no requirement that the first trade price of any trading day reflects the prior day's close. The only thing the price reflects is what investors think a stock is worth at that very moment.
The biggest factor is changes in investor demand while the exchanges are closed.
2006-07-07 13:50:09 · answer #1 · answered by Bluegrass Portfolio Management 1 · 4⤊ 0⤋
Yes, there can be trading overnight. But more importantly, things happen overnight. Stocks may be affected by changes in the economy, changes in company news, and even changes in mood. The world doesn't come to a screeching halt just because the stock market closes for a few hours.
2006-07-07 17:29:00 · answer #2 · answered by Anonymous · 0⤊ 0⤋
there are off-hours trading for some markets, yes. another reason is to gouge the folks that have an open market order to pop the next morning - a market order means 'i want x shares of stock y, and i am willing to pay whatever the going rate is at the time my order is processed.' so say you look over your favorite stocks that you track, see one is on a dip, and put in your market order for the next morning. the traders, if they artificially bump the price before the market opens, get to sell at a premium. you will notice that often times the stock will go back down the point or two it was 'up' in an hour or two - this assumes the stock isn't in play or otherwise currently 'newsy' ... if there was a noteworthy announcement after hours, of course the stock is going to be priced on the 'best guess' of the traders of what the stock is now worth in light of the news - fantastic earnings report? it's going to be much more expensive the next morning just b/c the traders think it's now worth that much ... the market either agrees or the stock price will correct itself.
2006-07-07 12:56:14 · answer #3 · answered by Nostrum 5 · 0⤊ 0⤋
A stock can "gap up" or down when it opens based on news released overnight (or early morning) before the market opens.
2006-07-07 14:55:38 · answer #4 · answered by jadz 2 · 0⤊ 0⤋
Beacuse the world markets are always trading due to the global time differences!
2006-07-07 12:49:08 · answer #5 · answered by Booty 2 · 0⤊ 0⤋
It could not be after hours trading could it? Are US stocks traded on foreign markets?
2006-07-07 12:47:42 · answer #6 · answered by Bear Naked 6 · 0⤊ 0⤋
Many stocks trade in pre-market, and after hour trading.
I use this web page in the a.m. to get an idea what has happened since yesterday's close:
http://money.cnn.com/data/premarket/
After hours:
http://money.cnn.com/data/afterhours/
2006-07-07 16:13:52 · answer #7 · answered by Rik 3 · 0⤊ 0⤋
there may be a company announcement like profit or loss above expected or even a merger with another company. this is what causes gaps
2006-07-08 23:06:04 · answer #8 · answered by starfield 2 · 0⤊ 0⤋