who is responsible for changing stock prices?

Question

I don't want an answer about supply and demand. I understand that prices increase as demand increases, etc. I want to know which person actually says, "This stock will now be listed at this price." or "This stock will now be raised (or lowered) to this price." For example, in a supermarket, the store owner utimately sets the price of an item. Who actually sets the price in a stock market?

Answer 1

I'm not sure you really do, "I understand that prices increase as demand increases, etc" because that is what does it.

Person A says, XYZ last sold for 10 but it hasn't appeared on the ticker in a few minutes, so I'll place an order to buy for 9.95.

Person B says, XYZ last sold for 10 but it hasn't appeared on the ticker in a few minutes, so I'll place an order to sell for $10.05. There now is a spread of orders, the stock is bid at $9.95 and asked at $10..05.

Person C and D says, XYZ last sold for 10 but it hasn't appeared on the ticker in a few minutes. So C says I want some, so I'll place an order to buy at market. So D says I want to dump mine, so I'll place an order to sell at market.

What could happen is that a specialist on the trading floor sees the order and does his arbitrage thing. The price, because of the market orders, becomes $10.05 and $9.95 and the public price either stays the same because nothing "moved" the market for XYZ, it essentially doesn't change from the average. But if there is a time delay in the order placing, then $10.05 takes one time peg place and $9.95 takes the other, whichever happens last becomes the new price, but that is if it happens on the market floor. Sometimes the brokerage computer sees the same set of things happen from that brokerage's on clientele. I've personally placed what should have been market changing orders but they didn't change the "market" price because they never got there--the brokerage computer did the arbitrage and the brokerage still had the same shares on their books, only customer C now has what customer D used to.

Here is where demand comes in, suppose E, F, and G all want some of XYZ. B still has some, but he's not at all interested to sell at less than $10. Here, the demand of E, F, and G have to be good enough to interest B in selling more of his holdings in XYZ. If $9.95 doesn't sell, then if they really want some, they will have to raise their bid. E then orders to buy at $10.05, and B's block is sold. F and G follows suite, but B doesn't have any more placed to sell. $10.05 isn't moving. F and G really want it, so they now bid $10.10. B still isn't interested. G really, really wants it, so he bids $10.15. B then says he'll part with a bit more, now $10.15 is the last sale price. Demand is what moved it. The moments of lack of supply is what forced demand to move up.

Answer 2

The guys in the pit.

When you as an investor want to buy a certain stock, you give your order to a broker. He then charges a fee (a brokerage) and passes it off to the guy in the pit. At this point, your broker doesn't care what happens; HE hasn't set the price.

Okay, then the guys in the pit, who are yelling out the prices or making the hand signals, ARE THE MARKET. They are the ones that set the price.

Answer 3

Ok, I know what you are saying. But you are looking at it the wrong way... Don't look at it like a supermarket, because its not, you can not look at stock like a store product with any kind of set price, because they are buying from suppliers at a set price, and re-selling them for profit.
Now, you are partially correct, there is a group of people who can set the price of a group of securities, in certain conditions... On the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX), there is a person known as a specialist, who is an official market maker, who sets the (Bid) and the (Ask) of a security. On others, namely the National Association of Securities Dealers Automated Quotations (NASDAQ), there is no specialist and security prices are set almost exclusively by supply and demand. For example, if a stock is trading at 50 dollars, there will be a group of market makers (banks, and other large financial institutions) that will be willing to buy (Bid) that stock at 49.99, 49.98, and 49.95, and 49.90, etc...and a group of market makers that are trying to sell (Ask) at 50.01, 50.02, 50.05, and 50.10. The Price between 49.99 and 50.01 is called the "spread". Now, that doesn't mean they will get what they are asking for, but when people come along and are willing to pay 50.01 for a stock, the deal is executed. The same if someone is willing to sell the stock at 49.99. Now, for example, if there is some news, lets say good news, a lot of people are going to buy the stock, and they will quickly execute transactions with the people selling at 50.01, and 50.02, and so on, as soon as there is no one that will sell the stock for 50.01, and will now instead only sell at a minimum of 50.02, or 50.03, the stock has officially moved, as no one can buy for 50.01, because there is "demand" for the stock at that price and the "supply" of people selling at 50.01 has been exhausted. they are now selling for 50.02 or 50.03 etc. Thus, supply and demand DID move the stock, albeit electronically, on a computer.
I hope that answered your question...

Answer 4

Nobody sets the price other than the sellers and buyers. Sellers offer their stock for sale, either at a certain price minimum or at whatever price the broker can get. Buyers offer to buy, either at a given maximum price or at whatever the price is that the broker can buy it for. The price that shows on the stock is the price of the latest trade that was made.

Answer 5

Prices are posted by market makers (big financial companies), but they don't set the price; they just respond, as you said, to supply and demand. Most often the actual calculations are automatically done by computer.

Answer 6

You are the ONLY OWNER of your share and only YOU can decide the price you want to sell your share.

Example:
Right now Yahoo! is worth $32.00
Howver, you can sell your share at $33.00, $34.00 or even $320.00 if you wish to do so.

Just like Wal-Mart, Target, Sears and Macy's each store has a diferent price and some deluxe stores have very expensive prices for the same thing.

When you type an order to SELL your share you must set your price (If this is a LIMIT ORDER)

If you type an order to SELL without price (MARKET ORDER) then the buyer offering the highest price will get your share.

The answer to your question is:
You. (If you are selling)

Answer 7

Your analogy is faulty. Stocks aren't sold at fixed prices like store merchandise. Its more like a "flea market" where potential buyers can haggle with sellers. If they can't agree on a price, no sale occurs.

Answer 8

it particularly is precisely a count of supply and demand, and the fee of a inventory can (and usually does) substitute with each and every commerce. the fee is suffering from how nicely the enterprise is doing, fairly against the contest; the present expenses of pastime; and maximum severely, via how traders discover the probably destiny overall performance of the enterprise.