How do you find out what drives certain sectors in the stock market?

Question

Where can I research this?

Answer 1

The macroeconomic variables are always important -- such as the responses of the first two answerers. You can get information from government websites such as Federal Reserves, Office of Management and Budget, and other government statistics sites

However, to understand certain sectors you need to know the key drivers for that particular sector. Each sector has its own drivers affecting the sector, and hence affecting the stocks of that industry.

In energy for example, you have several factors for example:

CAUSE: OPEC ---> EFFECT: Govts depend on oil income --> POSSIBLE RAMIFICATIONS: cartel restricts supply resulting in higher oil prices

CAUSE: Geopolitical --> EFFECT: Higher barriers to entry; more costly --> POSSIBLE RAMIFICATIONS: lower global spare capacity so higher oil prices

You have to study each particular sector. Read about industry and trade publications.

An easier way would be to read research firms' analysis of particular sectors and industries. If you have access to securities research, then you can find this information

Answer 2

Govt's policy decisions, international factors, entry of reputed investors into such sectors etc. are some factors which come to my mind. There are several books and articles on stock market theory and some of them will look at this topic also.

Answer 3

Economics; the economy is the main driver of the stockmarket as well as supply and demand--again economics.

PS: The NYSE is also a major influence in the world economy because the US's stockmarket contains around 60% of the world's economy. This is why what happens in the NYSE is very important to other world stockmarkets because it indirectly affects the other stockmarkets. Hence the term, "When the US sneezes the world catches a cold."

Answer 4

The 3 answers above me.

As well as some common retail sense or the industry that you work in. You are already on the inside.