The Economy and Markets 
Capital markets in the United States provide the lifeblood for our economic system, capitalism. Capitalism is a system where most of the means of production are owned privately and are run for a profit.
The capital market is where companies as well as the government come to raise long term funds. Companies need to finance buildings, airplanes, trains, ships, telephone lines, and other assets. They need to conduct research and development and to support many other corporate activities.
Much of this money comes from major institutions like pension funds, insurance companies, banks and foundations. Increasingly, it comes from individuals and small traders as well. Investors would not be willing to buy shares of a company they could not easily sell. The stock market, as well as other capital markets, facilitates the easy buying and selling of securities.
The market is also a source of income for investors. Rising financial wealth means increased spending on good and services, spurring economic growth.
Stock values also act as business and economic indicators. Fluctuating stock prices give corporate officers insight into how well the public perceives their management of the company. As an economic indicator, stock prices reflect how the public perceives governmental policy. If investors believe the government is instituting policies that will negatively affect the economy, stock prices will suffer.
The stock market reflects the public, as well as business attitudes about the economy and government policy now and into the near future. A rising market foretells a positive economic future, a declining market negative influence.
It is important for investors and traders to realize the stock market is NOT the economy and the economy is NOT the stock market. They are intertwined affect one another, but are not one in the same. Good traders look to both economic fundamentals as well as technical signals for future clues on market moves.