Why Rumor Is Defined By The New York Stock Exchange

1345 Words6 Pages
Rumor is defined by the Oxford English Dictionary as “an unverified or unconfirmed statement or report circulating in a community.” In the financial community, rumors have an effect on the direction of markets. The New York Stock Exchange in the United States is the epitome of how rumors can impact trade. The fluctuation of stock and commodity (raw material) prices on a daily basis is, in part, due to the daily news cycle. Although reports by news companies are supposed to be factual, statements made can be unverified. Because of the large scale of social media, anyone can make up rumors that can go viral. Stock traders rely on the news to determine what stocks they will buy or sell. News reports include important information such as: new product developments, company restructures, commodity reports, and scandals. Because of the rapid news, trading on the stock market happens very fast and it gets chaotic. As the buyers and sellers interact their process sets the stock price. The news effects the stock price because if a positive story circulates, there will be more buyers for a stock, which will raise the stock price; if a negative story circulates, there will be fewer buyers, which will lower the stock price. This constant process can either earn a big payday or be a total loss. Because of the money that people stand to either make or loose, rumors have an effect on the way individuals behave on the stock market. To better understand how rumors work within the financial
Open Document