Why do stock prices go up and down?

One of the questions we see most frequently is, “Why is my stock down today?” For investing newbies, it is a fair question. Let us dive into the reasons why stock prices can go up and down.

To put it just, it’s supply and demand. Prices go up when there are more buyers than sellers. Prices go down when there are more sellers than buyers. But how do investors decide whether to buy or sell? For all kinds of reasons, and usually a combination. Here are just a few of the things that may lead to a stock going up or down.

UP

  • Earnings beat expectations
  • Most of the market is up
  • New CEO was brought in
  • 5-star product review
  • Killer new product unveiled
  • Wall Street analyst recommends “strong buy.”

DOWN

  • Head of product leaves company
  • Profits are down
  • Biggest competitor introduces a better product
  • Celebrity stock guru says “sell.”
  • Major political, economic or social event
  • Rumors

It’s important to remember that stock prices will go up and down. And it’s really tough to predict precisely why or when. That’s why the stock market is best for investors who are willing to ride out the storms, rather than panic whenever their stocks tumble.

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/meghan Gardler