Market Is Rising: Meaning, Mechanism, and Real-World Example

Gordon Scott has been an experienced investor and technical analyst for over two decades. He holds the Chartered Market Technician (CMT) designation.

What Does "Market Is Rising" Mean?

The expression "market is up" indicates that the price levels of stocks, bonds, commodities, or their representative indices are currently higher than at a specific prior point in time. Typically, this phrase refers to the stock market's performance compared to the previous trading day.

Frequently, the term is also used to compare market performance over longer periods such as the past week, month, quarter, or year-to-date. The contrasting phrase is "market is down" or "market is off."

Key Insights

• "Market is up" describes a market closing at a higher price than the previous session.
• The opposite is expressed as "market is down" or "market is off."
• Markets generally rise when fresh, impactful information becomes available.

Understanding the Concept of "Market Is Up"

When financial news reports that the market is up, it means the market’s closing price has increased compared to the last closing price, often the day before. This comparison can also extend to the previous week or even the start of the calendar year.

The inverse expression, "market is down," is commonly heard as well. For example, a financial reporter might say, "The Dow Jones Industrial Average (DJIA) fell nearly one percent by today’s close," indicating the market closed lower than the previous session.

Several factors influence why the market rises during a trading session. Fundamentally, it boils down to the balance of buying and selling activity. When buying volume outweighs selling, or buyers act more swiftly than sellers, prices tend to close higher. This dynamic often results from new market information that alters asset valuations as interpreted by professional investors.

Illustrative Example

During earnings season, companies releasing better-than-expected financial results can push their stock prices higher. Analysts update their valuation models quickly after such news, which can collectively lift the overall market.

Other influences include employment data and changes in the federal funds rate set by the Federal Open Market Committee (FOMC). Since this rate affects borrowing costs across the economy, a decrease typically encourages spending and investment, often boosting stock prices.

Additionally, shifts in investor sentiment following elections, product launches, or geopolitical developments can also drive the market upward.

When media outlets report the market is up, they often refer to indices like the Dow Jones Industrial Average (DJIA), which tracks 30 major stocks on the NYSE and NASDAQ. For instance, if the Dow closed at 22,800 on Monday and rose to 23,000 on Tuesday, the market would be considered up at Tuesday’s close.

Implications of an Upward Market for Investors

An upward market doesn’t guarantee gains for all investors. Stockholders typically benefit when prices rise, but bondholders might experience losses since bond prices often fall as stocks climb.

During prolonged bull markets, investors face critical choices, such as whether to lock in profits or maintain their positions. For example, in December 2017, the market was amid one of the longest bull runs, prompting individual decisions based on personal risk tolerance.

In early 2018, the market underwent a correction, dropping about 12% in weeks. Investors who held stocks through this period might still view the market as up overall, whereas those who bought just before the decline might perceive differently. Ultimately, whether the market is up depends on one's investment timing and perspective.

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