Every day, without fail, stocks rise and fall. While these movements may seem mysterious, they often spring from concrete causes. Investors savvy enough to spot these driving forces may also suss out excellent opportunities to profit.

Basically, every stock trades at the latest price at which someone was willing to sell it, and at which someone else was willing to buy it. That willingness fluctuates depending on the people involved, the circumstances around the company, and even basic human psychology.

Why stocks do what they do
Here's a chart of some of the reasons why stocks move they way they do:

Reason for Stock to Go Up

Reason for Stock to Go Down

Increasing sales and profits

Falling sales and profits

Great new executive joins the company

Managers leave the company

Famous investors buy into the stock

Famous investors sell the stock

Analyst upgrade

Analyst downgrade

Company lands a big new contract

Company loses major customers

Other industry stocks or the broad stock market rises

Other industry stocks or the broad stock market falls

Company offers new product

Competitors offer new product

Company's industry is hot

Another industry becomes more popular

A competitor is struggling

A competitor is thriving

Test results show a product is useful

Test results show a product is harmful

Company targeted for a merger

Merger talks fail



No reason at all


Whichever way a stock moves, there's always a possible reason to explain it. (Except, uh, when there isn't. We never said the stock market was always rational.)

For example...
These companies saw significant moves recently, and I've compiled possible explanations for their changing prices:

  • On Aug. 17, Charles Schwab (NASDAQ:SCHW) shares dropped 5% on news that New York Attorney General Andrew Cuomo filed a lawsuit alleging that the brokerage had engaged in fraudulent sales and marketing of auction-rate securities.
  • On Aug. 20, Sears Holdings (NASDAQ:SHLD) shares fell 12% after the retailer reported lower-than-expected earnings results.
  • On Aug. 21, salesforce.com (NYSE:CRM) shares surged 16% after the company posted strong quarterly results. Also, shares of Nabors Industries (NYSE:NBR), a drilling contractor, gained 7% on news that the price of crude oil was rising.
  • On Aug. 24, Advanced Micro Devices (NYSE:AMD) shares rose 8% on a Wall Street analyst's upgrade. Goodyear Tire shares, on the other hand, fell almost 5% on news that the government's "Cash for Clunkers" program was ending. On another day, news that Goodyear would close its rubber museum may have prompted a similar 5% drop in shares.
  • On Aug. 27, Precision Castparts (NYSE:PCP) shares rose almost 10% on news that the company will acquire Carlton Forge Works. But Massey Energy (NYSE:MEE) shares fell about 3% on pessimistic findings from the government on natural gas supplies.

The market's ups and downs aren't always fun to endure, but we can often turn them to our advantage. If you see a stock falling for no good reason, or a seemingly temporary reason, you might be looking at a buying opportunity.

For more investing insights and ideas:

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Salesforce.com is a Motley Fool Rule Breakers recommendation. Precision Castparts and Charles Schwab are Motley Fool Stock Advisor selections. Sears Holdings is a Motley Fool Inside Value pick. Try any of our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.