What helps stocks go up?

Stocks tend to increase when there's strong demand and positive investor sentiment, and companies show strong earnings growth and future prospects.

How do you know when a stock will go up?

Predicting stock price movements is inherently difficult, but investors often look at a company's fundamental performance, market trends, and technical analysis to gauge potential upward movement. However, market timing is a difficult and often unprofitable approach to investing. Rather than investing solely based on share prices, it is wise to put cash in businesses that you believe are solid investments over the long run.

What is the 7% rule in stocks?

The 7% rule is a risk management strategy suggesting you sell a stock when it falls 7% or 8% from your purchase price, regardless of the reason for the decline. The 7% rule is designed to help investors cut losses quickly and prevent larger losses from developing. However, it is important to look beyond share price movements and at the underlying business. You shouldn't buy or sell shares simply because a stock is up or down. But if you own a stock and your thesis about the business has changed, that could be a good reason to sell shares.

What Makes Stocks Go Up and Down?

Learn why the stock market and individual stocks tend to fluctuate.

By Rachel Warren – Updated Jun 2, 2026 at 10:59 PM EST | Fact-checked by Frank Bass

Key Points

Stock prices fluctuate due to supply and demand dynamics during each transaction.
Investor sentiment about a company, industry, or economy drives demand for stocks.
Long-term stock value is rooted in the future earnings potential of the company.

In the short term, stocks go up and down because of the law of supply and demand. Billions of shares of stock are bought and sold each day, and it's this buying and selling that sets stock prices.

An infographic explaining different factors that affect stock prices. — Image source: The Motley Fool.

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Imagine 1,000 people are willing to buy one share of stock XYZ for $10, but only 500 people are willing to sell one share of XYZ for $10. The first 500 buyers each snag a share for $10. The other 500 buyers who were left out then raise their offer price to $10.50. This higher offer price persuades some owners of XYZ who didn't want to sell at $10 to sell at $10.50. The stock price is now $10.50 instead of $10 since that was the price of the latest transaction.

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What affects stock price?

High demand for a stock drives the stock price higher, but what causes that high demand in the first place? It's all about how investors feel:

Market sentiment toward the stock.
Market sentiment toward the industry.
Market sentiment toward the stock market.
Confidence in the economy.

The more confident investors are about a company's prospects or the potential for positive developments, the more likely they are to want the stock. Conversely, a loss of confidence can prompt investors to sell, pushing the stock price down.

Factors that can affect sentiment toward a stock include quarterly earnings reports that beat or miss expectations, analyst upgrades or downgrades, and positive or negative business developments.

Demand for a stock can also be affected by sentiment toward a particular industry. An electric vehicle company, for example, may see its stock price soar as investors snap up shares, confident in the future of the EV industry. A rising tide can lift all boats.

This goes both ways. If investors sour on an industry, every stock in that industry could suffer -- regardless of how each company is doing.

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Confidence in the stock market can also push up demand and prices for individual stocks. If investors believe that stocks are a good investment, either because valuations are attractive or because the stock market has been trending upwards, an increase in demand can push prices higher across the board.

The opposite is also true. A declining stock market can zap investor confidence, leading to more selling and lower stock prices, while high valuations can prompt some investors to buy fewer stocks or sell their holdings.

Opinions about the trajectory of the economy also play a role in setting stock prices. Investors may sell some stocks in anticipation of an economic slowdown. The widespread belief in a recovering or booming economy, on the other hand, can drive demand for stocks.

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Pattern Day Trader

The Financial Industry Regulatory Authority, or FINRA, defines day trading specifically as buying and selling the same security on the same day in a margin account.

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Why do stock prices change every second?

Stock prices are driven up and down in the short term by supply and demand, and the supply-demand balance is driven by market sentiment. But investors don't change their opinions every second. So why, then, do stock prices change so fast?

The current stock price is nothing more than the price at which the last transaction took place. For many stocks, transactions are occurring every second the stock market is open.

Investors trade an average of 50 million shares of Apple (AAPL +3.52%) each day. Every time a block of shares is bought and sold, the stock price changes to reflect the latest transaction price. The sheer number of transactions ensures that the stock price fluctuates every second, even if there's been no change in market sentiment.

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The big picture is what matters

Long-term investors, like those of us at The Motley Fool, don't much care about the short-term developments that push stock prices up and down each trading day. When you have years or even decades to let your money grow, analyst reports and earnings beats are often fleeting and irrelevant. What matters is where a company will be five, 10, or 20 years from now.

In the long term, a stock's value is ultimately tied to the company's future cash flows. Investors who believe a company will be able to increase its earnings in the long run or who believe a stock is undervalued may be willing to pay a higher price for the stock today, regardless of short-term developments. This creates a pool of demand undeterred by day-to-day news, which can push the stock price higher or prevent big declines.

While a lot of ink is spilled about daily fluctuations in stock prices and while many people try to profit from those short-term moves, long-term investors should be laser-focused on a company's potential to increase its profits over many years. Ultimately, rising profits push stock prices higher.

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What Makes a Stock Price Go Up FAQ

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

TMFRachelW

Rachel Warren has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

What Makes a Stock Price Go Up?

Learn why the stock market and individual stocks tend to fluctuate.

Key Points

What affects stock price?

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Why do stock prices change every second?

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