What is the role of the stock market in the economy?

The stock market plays a crucial role in the economy by providing companies with access to capital through the sale of stocks, or shares. This allows businesses to raise funds for expansion, innovation, and operations, driving economic growth. The stock market also offers investors the opportunity to buy ownership stakes in companies and earn returns through dividends and capital appreciation. As a reflection of the broader economy, stock market performance can indicate investor confidence, economic trends, and potential future growth. Additionally, the market provides liquidity, enabling investors to buy and sell assets efficiently.