Share prices go "up" and "down" every day because of “supply and demand”. If more people want to buy than sell a stock, this will drive up the share price. Conversely, if more people want to sell than buy a stock, there will be greater supply than demand, and the share price will fall.
Here we will look at the various reasons that cause investors to want to purchase or sell a stock. If you understand this you will know why stock market prices rise and fall.
Why Stock Prices Go Up:
- After a stock split, the stock price may go up as more people rush to buy stocks at lower rates.
- When a company buys back its own shares, the fewer remaining shares in the market tend to go up in price.
- Other stocks in the same industry group or sector go up.
- The company achieved success in growing sales.
- Company earnings are more than the prediction.
- Announcing exciting new product and service.
- More exciting products and services are expected.
- Enter into a new business with the expectation of more profit for the company in future.
- The company hire a new CEO with a proven track record of success.
- The company successfully lands a huge contract.
- An increasing number of people are purchasing the products.
- The company is acquired by or merged with another big company.
- Acquisition rumors.
- Other good company news.
Why Stock Prices Go Down:
- Sales and profits drop.
- Lots of people are selling shares on the same day.
- Other stocks in the same industry group or sector go down.
- Someone files a lawsuit against the company.
- Government makes stricter rules or laws that might hurt sales.
- Negative rumors about the company.
- The company's workers go on strike.
- A natural disaster.
- A recession occurs.
- Other bad news.
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