Markets rise and fall for a variety of reasons, with some factors encouraging investment and others discouraging it. In general, a healthy, growing economy and a stable political situation provide an environment in which stock and real estate markets gain value. Similarly, a period of rising interest rates may give the bond markets a boost, and a period of political and economic uncertainty may drive money into short-term cash equivalent investments, such as U.S. Treasury bills.
For example, when earnings are strong and unemployment rates are low, stock markets tend to rise, as they did during most of the 1990s. But when corporate earnings fail to meet expectations and unemployment increases, stock markets tend to drop, as the U.S. markets did in 2000 and 2001.
By comparing the information in these charts, you can get a sense of how stock and bond markets react differently to some of the same factors.
