It was a wild first half of 2025 that suffered turbulent swings in the global markets driven by President Donald Trump’s multifront trade war as reported by CNBC. In March, the Nasdaq, S&P 500 and the Dow Jones Industrial Average saw the worst single-day drops in recent history. The following month, the three indexes whipsawed on the news that the Federal Reserve was prepared to keep financial markets functioning while Trump softened on his tariffs. Here’s a look at how stocks work and what drives them.

Why the bull and bear?

It is uncertain how the bull and the bear became symbols of the stock market’s movement. According to Investopeida, the most accepted story is that the bull, that thrusts its horns up to attack, represents the rise of the markets, while a bear, that swipes its paws down when it attacks, represents the drops in the markets. There’s not much evidence to prove this etymology is true, but it makes it easier to remember in which direction the bull and bear markets move.

TYPES OF TRADING

SHORT-TERM TRADING

Scalping: Involves making numerous trades throughout the day, aiming to profit from small price fluctuations within seconds or minutes.

Day Trading: Buying and selling stocks within the same trading day, often relying on technical analysis to identify short-term price movements.

Swing Trading: Holding stocks for a few days to a few weeks, capitalizing on price swings or "swings" in the market.

LONG-TERM TRADING

Position Trading: Holding stocks for longer periods, from weeks to years, based on analysis or belief in a company's long-term growth.

Long-Term Investing: Holding investments for years with the goal of benefiting from the overall growth of the market or a specific company.

OTHER METHODS

Momentum Trading: Capitalizing on the strength of a stock's price movement, betting on continued upward or downward trends.

Algorithmic Trading: Using computer programs to automatically execute trades based on preprogrammed instructions or strategies.

Fundamental Trading: Making investment decisions based on a company's financial health, earnings and other fundamental factors.

Technical Trading: Using charts and other data to analyze market trends and patterns to predict future price movements.

Source: Investopedia

DRIVING THE MARKETS

The U.S. indexes, such as the Dow Jones Industrial Average is driven by a variety of factors, including the performance of its constituent stocks, economic conditions and news events. Other factors like economic data, trade wars and the strength of the U.S. dollar can also cause movements. Furthermore, individual companies, especially those with higher share prices, significantly impacts the index's value.