When the beliefs are overwhelmingly pessimistic, stock prices drop. Why should companies behave any differently with respect to layoffs?
10-20 years ago, maybe. It's now driven largely by semi-autonomous algorithms monitoring swings/trends. I'd argue that it finds a 'simulated' price rather than a 'correct' price. The stock market is much less susceptible to emotional speculation than it used to be, for better or for worse.
A quick google yields multiple articles claiming various percentages for algorithmic vs meatspace trading. Investopedia claims that as early as 2010, upwards of 60 percent of all trading was done by algorithm. That number has risen since as computation has become cheaper. Source: https://www.investopedia.com/terms/a/algorithmictrading.asp
Also, I didn't say it was better. IMO it's probably just as volatile/dangerous. It's just harder to predict as it's not as rooted in actual emotion/speculation.
You don't need to be the smartest person in the room to be good at trading, you just need to know what everyone else in the room is thinking. Algorithms are part of the room now, so they try to predict what other algorithms are thinking.
overwhelmingly as accounted for by head count or size of portfolios?