Reviewed by Aug 26, 2020| Updated on
A catalyst in equity markets means an event or news that drastically increases or decreases the price of the security. For example, a piece of legislation, a lawsuit, a profit report, and others.
A catalyst is anything that can bring in a drastic change in a stock's current trend. Negative news can rattle investors and break upward momentum. In contrast, good news can push the stock out of the doldrums.
Based on their market philosophy, investors assign different levels of importance to catalysts. For pure investors, catalysts seem pleasant if their assessment of a company is correct. Such investors watch for catalysts or their effects on prices to buy into bullish turns or how to bow out of bearish ones.