In order for the stock market to move substantially in one way or another, a virtually limitless number of variables must be present, including economic data, geopolitical events, and market mood.
Any market movement, whether upward or downward, requires a substantial shift in the balance between supply and demand. The supply of shares generated by sellers closing out positions or shorting shares meets the demand for shares created by long-term investors.
The increase in interest rates translates into increased borrowing costs, which slows down buying activity and causes stock values to plummet.
The opposite is true: tax hikes usually result in less dollars available to invest in the stock market, which has a negative impact on prices – or fewer dollars available to companies as profits – resulting in lower stock prices.
Put another way, supply is the amount of shares that individuals are willing to sell, and demand is the number of shares that people are interested in purchasing.
Consider the case of a single business whose stock is up 15 percent as a result of good earnings reports.
The price of a stock rises as a result of the disparity between supply and demand for a particular stock until an equilibrium is achieved. Keep in mind that there are more individuals seeking to purchase shares than there are to sell them in this situation. As a consequence, buyers must raise the price of the shares they are bidding on in order to persuade sellers to part with them. In addition to that it is worth noting that depending on the law of supply and demand investors are able to measure volume of stocks, which is one of the common indicators and allows shareholders to forecast future changes. When the entire market moves, a similar situation occurs: there are more buyers/sellers of businesses in the stock market than there are sellers/buyers, causing the price of companies to rise or fall in tandem with the overall market movement. Indeed, the stock market as a whole is nothing more than a mashup of individual corporations.
Facebook Inc. (FB) became the first company to have its market capitalization reduced by more than $100 billion in a single day on July 26, 2018, when its stock price fell by $119 billion. Facebook Inc. (FB) is the largest company to have its market capitalization reduced by more than $100 billion in a single day. It took only one day for Facebook’s shares, according to Axiory, to fall from $216 per share on July 25, 2018, to $176 the following day. While the record-breaking figure of $100 billion or more seems to be significant, there are other major businesses that have had significant single-day price losses.
Following closely on the heels of Facebook is owned by Intel (INTC), the world’s largest chipmaker, which suffered a $90 billion loss on September 22, 2000. The announcement occurred at the same time that the dot-com bubble burst, which contributed to the drop. According to expert expectations, sales growth in the third quarter would be half as high as in the previous quarter. A total of about 22 percent of the company’s market capitalization was wiped away.
Microsoft (MSFT) claims a third place on the list, despite the fact that its market capitalization suffered a significant decline on April 3, 2000, to the tune of $80 billion.
Bill Gates, who was at the time one of the company’s biggest owners, suffered a loss of about $11 billion during the selloff.
The business’s fall was precipitated by a federal court judgment that concluded that the company had broken antitrust laws by abusing its monopoly in personal computer operating systems to restrict competition. The verdict was reversed on appeal.
Apple (AAPL), the manufacturer of the iPhone, is ranked fourth for suffering a loss of almost $60 billion on January 24, 2013.
Despite the fact that the business reported a record profit for the quarter, the market did not see the company’s future projections favorably since they projected a decline in customer demand for its goods, particularly for its famous iPhones, in the future. Across the board, Apple shares were down about 12 percent throughout the trading day, and the stock was down 36 percent from its all-time high of $705 set earlier that day.
In second place is Exxon (XOM), which suffered a single-day loss of almost $52.5 billion on October 15, 2008, according to the company’s financial statements.
The fall in Exxon shares was accompanied by a decline in the entire market, with the Dow Jones Industrial Average (DJIA) dropping 733 points, the second-largest one-day point loss in the index’s history, behind only the loss on September 29, 2008.
Crude oil prices fell to a then-record low of $74.62 a barrel, with the oil behemoth ExxonMobil taking the brunt of the fall.
In conjunction with the publication of the Organization of the Petroleum Exporting Countries (OPEC monthly)’s report, which cited increased concerns about a worldwide recession affecting oil consumption and slowing the world economy, the price of oil fell.
A drop in the company’s first-quarter profits and a projection for second-quarter earnings that fell short of analysts’ forecasts contributed to the historic loss in the market capitalization of heavyweight conglomerate GE (GE) on April 11, 2008, setting a new record low. The stock price of the index heavyweight dropped by about 13 percent.
On February 2, 2018, the internet behemoth Alphabet (GOOGL) witnessed its market capitalization plummet by more than $41 billion. When the business missed its quarterly profits estimate, the stock dropped by more than 5% immediately after the news. However, despite the fact that the search engine reported a strong increase in advertising revenue, the gains were offset by greater expenditure to market its consumer devices, YouTube app, and cloud computing services.
NASDAQ-listed online retailer Amazon (AMZN) had its stock price drop by more than 5% on April 2, 2018, knocking roughly $36.5 billion off the company’s market capitalization. The stock of Amazon, despite the fact that it had been among the best-performing stocks over the previous 12-month period, suffered a setback as a result of a tweet from former President Donald Trump, who accused Amazon of defrauding the United States Postal Service and asserted that the USPS loses “billions of dollars” making deliveries for the e-commerce giant.