This question is effectively two-fold.
First: Why do stocks within a given sector move in tandem when the movement is only ONE stock within that sector is justified? Ex: Earnings for company X is amazing but company Y and Z all go up with X simply for being in the same sector. What proof is there that Y and Z will have stellar earnings? This never made sense to me.
Second: Why do stocks IN GENERAL move in tandem. There tend to be green days and red days. LLY will go up and MSFT will go up one day, then LLY will go down and MSFT will go down. I *know* this is not a sure thing but it happens quite often and I do not understand the logic behind it. Why would companies in different fields mirror each other so heavily? Why will a sizable portion of the US market go up when only 1 or 2 or 3 companies really deserve to go up on a given day?
Thanks!