Day: November 1, 2025

The stock market distributes ownership of some of the world’s largest companies among hundreds of millions of individual investors, whose buying and selling decisions determine their value. It is also the place where funding for technological advances like smartphones and medications flows, largely from investors who expect to profit from them.

In this massive network of trading, shares of publicly-owned companies are bought and sold, often via brokers who facilitate transactions almost instantly. People looking to buy a share find matches with sellers, and prices are constantly negotiated (and renegotiated) in response to new information and to supply and demand. These processes, involving buyers and sellers who are all making their own unique and rational decisions, produce a wildly complex system of trading that’s monitored by global agencies like the Securities and Exchange Commission in the U.S. and FINRA in Canada, which are charged with protecting retail investors.

While we may think of the “stock market” as a single entity, it’s actually composed of two distinct parts: exchanges where shares are traded and indexes that track and report on their performance. We typically refer to the Dow Jones Industrial Average or S&P 500 when we talk about the broader market, but there are many others that are country- or region-specific. Some indexes are even sector-specific, reporting on a particular industry like technology or health care. Understanding these different components of the market is essential to knowing how it works, and why its movements matter to us.

GDP measures the monetary value of all the goods and services produced in a country during a certain period of time, typically a year. It includes both market and nonmarket production, such as government spending on defense or education. GDP is an important metric for countries, businesses and individuals. Economists use it to assess a country’s economic health and understand the economy’s cycles. It is also used to compare economies and predict future growth.

The official definition of GDP is determined by the Organisation for Economic Co-operation and Development (OECD). It defines production as the sum of gross domestic product by final consumption, investment, and net exports at market prices. The consumption method of calculating GDP does not account for business-to-business transactions, and therefore it is less sensitive to economic fluctuations than metrics that include all transactions.

One criticism of GDP is that it focuses on material output, without considering the impact to citizens’ well-being. For example, an increase in GDP may come at the cost of air pollution or inequality. It also does not fully take into account quality improvements or new products, as they are only reflected in GDP in their monetary value.

However, most economists agree that GDP is a good indicator of overall economic progress. It is closely followed by analysts, investors, and policymakers. The advance release of GDP is often anticipated and can move markets, although the impact is usually limited since GDP data is backward-looking.