There Are Many Factors That Affect The Stock Market. So Many, In Fact, That It I

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Term Paper Title	There Are Many Factors That Affect The Stock Market. So Many, In Fact, That It I
# of Words	972
# of Pages (250 words per page double spaced)	3.89

There are many factors that affect the stock market.  So many, in fact, that it is immeasurable.  There are financial factors, such as corporate profits and interest rates which affect the market, and other factors.  Factors such as involvement in war, foreign affairs, trade agreements, and political events.  How do these other factors affect the stock market when there is seemingly no connection to finance?
Many of these other matters affect the economy, such as trade policy, which in turn affect corporate investment.  When a policy is implemented which affects the economy, corporations react accordingly.  This reaction can improve the financial position of companies, or it can make it worse.  Investors will in turn react to these changes by selling stock or buying into the market.
Many times, investors will react to policies and events before there is a corporate reaction.  If an investor thinks that a certain event will affect corporate profits, he may react before the corporations do--in  order to limit losses or to gain more.  This event may not have any merit as one that would affect the market, but the investor will react on a "hunch".  Let’s examine the Clinton/Lewinsky scandal in discussing this matter.
Did the Clinton/Lewinsky scandal have an effect on the stock market?  There may not be a clear answer to this question.  The popularity of the scandal in the news may have caused some investors to react, but how?  Did they sell off their stock, and if so, why?
Some investors may have thought that since perjury and obstruction of justice may be impeachable offenses, a presidential impeachment would be in the near future.  The president supports and opposes many different economic policies.  If this president is impeached, then certain policies may no longer be favored by the new president.  Of course the new president would be Al Gore, who would support and oppose the same policies, but he may not have the congressional support which Clinton enjoyed to implement these policies.
Perhaps an investor thought that the scandal would cause presidential support to deteriorate in congress, limiting the president’s power.  This could have been thought of as a hindrance to the president’s ability to impose economic and trade policies which affect corporate profits.
The scandal could have had psychological effects on investors, causing them to back out of the market.  There may have been a reduced interest in investing due to the widespread media coverag...

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