Stock

• Stocks are shares of ownership in a company.
  
  

Benefits

• The more valuable a stock is considered to be, the more money other stockholders are willing to pay for a stock. Therefore, if a stockholder buys stock and the perceived value of the company goes up, the stockholder will be able to sell his shares for more money.
  
  

Wealth

• The value of stock affects whether or not a stockholder feels that it will be risky to spend money. Falls in stock will cause stockholders to spend less, causing a slowdown in the economy.
  
  

Pensions

• Pension payouts are also reduced since much of the pensions are put into the stock market.
  
  

Psychology

• News about bad stock markets cause consumers to become more careful about spending, which slows down the economy.
  
  

Borrowing

• The cost of borrowing money increases when stock prices fall, hampering the ability of firms to expand.