Stocks react on indexes

Discussion in 'Economics' started by tradebanzai, Jun 29, 2006.

  1. Hi everybody,
    today all the indexes (I mean SP,Dow and NQ) surged sharply after FOMC meeting. But as we now, when the rate goes higher, stock prices go lower. Where am I wrong? Or is it really because of "signal the central bank may pause after its latest interest-rate increase"?
    The other question is why some stocks react on and "look" at indexes, but some don't?
    In general I wonder how it could happen that some stocks follow the indexes' moves precisely? This indexes consist of many stocks and generalize all their moves...
    For examples: ATYT (didn't follow the indexes) and RHAT (followed).
    Really appreciate any ideas.
  2. The index does what most stocks in that index do... take the DOW30. It doesnt take the whole 30 issues to be going up in order for the YM to go up... it will follow the mayority {averaged by each company´s weight on the index of course}

    In the case of the SP500, just take the companies with the most weight in the index, and they´ll probably move in similar patterns... most times...