Definition of Catalyst

What is a "catalyst"? What is the definition of the term "catalyst" as it applies to the stock market?

According to the dictionary, a "catalyst" is a "person or thing that precipitates an event".

When it comes to the stock market, you may hear the word catalyst used in a manner such as this:

Definition of Catalyst in finance"The catalyst for the stock's 40% upswing was a stronger-than-expected earnings report."


"The catalyst for the multiple downgrades of XYZ was the company's multiple FDA rejections."

Examples of positive catalysts might be: stronger than expected earnings, upgrades, positive news from the FDA, signing of a new deal

Examples of negative catalysts might be: weaker than expected earnings, downgrades, FDA rejections, loss of an existing deal

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