• A series of different factors influences the stock market. Primarily, the amount of money that a company earns helps drive the stock price. However, the Federal Reserve's interest rate and unemployment also have an influence on the stock market. The changes in these different values and, more importantly, the consistent fluctuation makes it possible for the stock market to go up and down. Understanding these fluctuations and keeping a careful eye on them makes it possible for people to invest wisely.
  
  

Earnings

• As a stock's earnings continue to go up, investors begin to gain confidence in the company because they are returning profits. Therefore, more investors put their money into the company as the earnings continue to go up. However, at the same time, when the company's earnings begin to go down, investors begin to lose faith in the company and pull their money out of the stock. This, in turn, causes the price of the stock to drop. The best time to see the earnings rise is right around the holiday season because these are the most profitable months for companies.
  
  

Interest Rate

• To increase consumer spending, the Federal Reserve cuts interest rates. When this happens, there is no incentive to offer people with savings accounts and CDs any interest, so banks cut their interest rates. Investors, therefore, see it as a waste of potential earnings to keep their money in these safer investments and throw their money into the stock market instead. This increase in money sends the market up. However, if the Fed raises interest rates, the stock market tends to drop a little because investors are putting their money into safer investments that earn more. Being able to catch the dropping interest rate early makes it easier to profit in the long run.
  
  

Unemployment

• A company's earnings is based on the amount of money that people have to buy products. When unemployment begins to rise, there is less money in the economy to purchase goods which causes profits to drop. As this happens, the economy tightens and investors pull their money out of those stocks. On the flip side, though, if unemployment drops and the economy is flourishing, people buy more goods and this makes the company appear stronger. The result of this is that people are more willing to throw their money into these prospering companies and the stock rises.