Stocks whose price movements who tend to follow the business cycle are called

Question

Quizplus · Accepted Answer

Cyclical stocks are directly influenced by macroeconomic factors such as GDP growth, inflation, and interest rates which tend to follow the business cycle. These stocks are typically from the industries that are capital intensive and have high fixed costs such as manufacturing, construction, and automotive. When the economy is growing, demand for goods and services increases, leading to higher revenues and earnings for companies in these industries. Conversely, during an economic downturn, demand drops, leading to lower revenues and earnings. Therefore, investors typically buy cyclical stocks during economic expansion and sell them during recessions.

Stocks Whose Price Movements Who Tend to Follow the Business