What moves stock prices? Earnings, rates, flows, news and sentiment

A stock price is the last price at which a buyer and a seller agreed to trade. That sounds circular, and in the moment it is: the price moves because someone was willing to pay more, or accept less, than the trade before. The useful question is why their willingness changed. Over years the answer is mostly about the business: what it earns, how fast that grows and how much investors demand to be paid for waiting and for risk. Over days the answer is mostly about news that changes those expectations, plus money moving in and out for reasons that have little to do with the company at all.

This pillar guide walks through each force in turn: earnings and expectations, interest rates and the discount rate, flows and positioning, news and macro data, and sentiment. Each comes with a real example from Finabase data, including five consecutive NVIDIA earnings beats that produced four down days, and the four-session, 12% drop in the S&P 500 ETF in April 2025 that was followed by its biggest one-day gain in years.

The one idea behind every price move

A share is a claim on a company's future profits (see What is a stock? A complete beginner’s guide to shares). Its value today is what those future profits are worth now. Two things set that: how big investors expect the profits to be, and the return they demand for waiting and for the risk that the profits disappoint. That demanded return is the discount rate.

This is the Gordon growth model, a simplification that assumes cash flow grows at one steady rate forever. Real valuations use more detailed forecasts, but the shape of the answer is the same, and it shows the three levers that move a price:

1. Expected cash flow. If investors raise their estimate of next year's profits, the price rises in proportion.
2. Expected growth. Faster expected growth shrinks the denominator, so small changes in long-run growth expectations can move prices a lot.
3. The required return. It equals a risk-free rate (such as a Treasury yield) plus a risk premium. If either rises, the price falls.

Every force in the rest of this guide works through one of those three levers, or through the plumbing of trading itself: who has to buy or sell today, regardless of value.

Earnings and expectations

Over long periods, stock returns can be split into three parts:

• Earnings growth: the profits per share the company adds.
• Dividends and buybacks: cash returned to owners (see Dividends and DRIPs: key dates, yield and reinvestment and Stock buybacks: how share repurchases work and what they do).
• Change in the valuation multiple: whether investors pay more or less per dollar of earnings at the end than at the start (the P/E ratio).

Over a decade or more the first two usually dominate, because a multiple can only expand or contract so far, while earnings can compound for decades. Over a single year the third often dominates: the market can re-rate the same earnings by 20% in either direction.

In the short run, though, what moves a stock is not earnings themselves but news about earnings relative to what was expected. Analysts publish forecasts of revenue and earnings per share; the average is the consensus estimate. When a company reports, the market compares the result, and especially its guidance for coming quarters, with that consensus and with the less formal expectations that traders have built up. The difference is the earnings surprise. A company that grows profits 30% when 35% was expected has disappointed, and its stock may fall.

Earnings days are where the news is

Quarterly reports are the single largest scheduled source of company-specific news, so single-stock volatility clusters around them. We measured it for six of the largest US companies over the two years to October 29, 2026, using Finabase daily bars and each company's report dates. All six report after the 4:00 p.m. close, so the reaction shows up in the next session.

Across all 29 reports, the average post-earnings move was 6.0%. Microsoft moved 5% or more on only 8 of 500 sessions in the period, and two of those 8 were the days after its January and July 2026 reports (−10.0% and +15.5%).

A beat is not enough: NVIDIA's five beats

NVIDIA beat the consensus EPS estimate in each of its five reports from August 2025 to August 2026, by between 3.2% and 6.3%. The next-session reactions were −0.8%, −3.2%, −5.5%, −1.8% and +8.7%.

Two lessons follow. First, a company that beats every quarter teaches the market to expect beats, so the bar that matters is the unofficial one, the size of beat and the guidance traders had already priced. Second, the first reaction is not the last: after the November 2025 report the stock opened 5.1% higher and closed 3.2% lower, a swing of more than 8% within one session as investors digested the details. The Trading earnings season: implied moves, IV crush and earnings gaps guide shows a similar mismatch for Meta, and how options price the expected size of these moves in advance.

Interest rates and the discount rate

The required return in the formula starts with the risk-free rate, which in practice means Treasury yields. When the 10-year Treasury yield rises, every future dollar of profit is worth less today, and a bond becomes a more attractive alternative to a stock. Both push stock prices down, all else equal.

The effect is strongest for companies whose profits lie furthest in the future. A fast-growing company that expects most of its cash in ten or twenty years is like a long-term bond: its value is very sensitive to the discount rate. A mature company paying large dividends today is less sensitive. That is why 2022, when the 10-year yield rose from about 1.5% to nearly 4%, hit the growth-heavy Nasdaq-100 much harder than the broad S&P 500. How interest rates affect stocks: discount rates and equity duration works through the arithmetic and the data.

Rates themselves move on expectations about the Federal Reserve and inflation. A hotter-than-expected CPI report or a hawkish FOMC statement can raise yields within minutes and pull the whole market down with them, even though no company's business changed that morning.

Macro news and policy shocks

Some news changes the outlook for almost every company at once: a recession scare, an oil shock, a war, a change in tax or trade policy. These are systematic shocks, and they are why most stocks tend to rise and fall together on big days. A stock's beta measures how strongly it tends to move with the market.

The clearest recent example is the tariff shock of April 2025. After the close on April 2, 2025, the US administration announced broad new tariffs on imports from most trading partners. Investors marked down expected profits (higher costs, slower trade) and raised the risk premium they demanded (much more uncertainty) at the same time.

SPY closed at $564.52 on April 2. Four sessions later, on April 8, it closed at $496.48, a fall of 12.1%. On April 9 the administration announced a 90-day pause on the higher country-by-country rates for most trading partners, and SPY closed at $548.62, up 10.5% in one day. By May 2 it closed at $566.76, above its April 2 close. Nothing about any single company's products changed in those six sessions. What changed was the expected path of profits for nearly all of them, and the price investors demanded for bearing the uncertainty.

Scheduled macro data move markets the same way, on surprises rather than levels. The monthly jobs report (nonfarm payrolls), CPI and GDP releases are compared with economists' forecasts, just as earnings are compared with analysts'. A strong jobs number can even push stocks down if investors read it as a reason for the Fed to keep rates higher for longer.

Flows, positioning and the plumbing of trading

Prices also move because someone has to trade, whatever they think of the value. Some of the most common reasons:

• Index changes. When a company joins the S&P 500, every fund that tracks the index must buy it on the effective date; when it leaves, they must sell. The announcement itself often moves the stock (see Index investing: passive vs. active funds and what the data shows).
• Fund flows. Money arriving in, or leaving, index funds, sector ETFs and mutual funds is put to work across their holdings. A wave of redemptions forces sales of stocks the managers might otherwise keep.
• Forced selling. A margin call or a fund hitting a risk limit makes investors sell into weakness, which can deepen a fall.
• Short covering. Short sellers who buy to close their positions add demand; when many do it at once the result can be a Short squeeze: how it works, warning signs and the GameStop case.
• Rebalancing. Pensions and target-date funds that hold fixed stock-bond mixes sell stocks after a strong quarter and buy after a weak one (see Rebalancing a portfolio: calendar vs threshold, drift and taxes).

Flows matter more for small, illiquid stocks, where a modest order can move the price (see Liquidity and slippage: volume, depth, spread and market impact), and on days when many investors want to trade in the same direction. For large stocks their effect on price is usually temporary, but "temporary" can last for weeks.

Sentiment and risk appetite

The risk premium in the valuation formula is not fixed. It reflects how much compensation investors as a group demand for owning risky assets, and that moves with mood. In confident periods investors accept lower expected returns, which pushes prices up; in fearful ones they demand more, which pushes prices down, even when earnings forecasts barely change.

Sentiment shows up in several measurable places:

• The VIX, the volatility the options market implies for the S&P 500 over the next 30 days. It tends to jump when stocks fall (see Volatility and the VIX: historical vs implied volatility explained).
• The put-call ratio and other options-market positioning.
• Credit spreads: the extra yield investors demand on corporate bonds over Treasuries (credit spread).
• Breadth: whether many stocks or only a few are rising (market breadth).

Sentiment also feeds on itself. Rising prices attract buyers who chase recent returns, and falling prices create sellers who want out, so trends in mood can overshoot what fundamentals justify in both directions. Behavioral finance studies why; the Trading psychology: loss aversion, overconfidence and other biases guide covers the same biases from a trader's seat.

Company news beyond earnings

Between reports, many other events change what a company is expected to earn:

• Analyst actions. Upgrades, downgrades and price-target changes (analyst rating, price target). They move prices partly because they carry new information and partly because many investors watch them.
• Corporate actions. Mergers and acquisitions, spinoffs, share issuance (dilution), buybacks and dividend changes.
• Product, legal and regulatory news. Drug trial results, antitrust rulings, a product recall, a big contract win.
• Insider and institutional filings. Executives' trades on Form 4 or a well-known investor's stake on Form 13F.
• Peers' news. A competitor's results or warning often moves the whole group, because it says something about shared demand.

Material news usually arrives through an 8-K filing or a press release. Companies time big announcements outside regular trading hours, so the reaction often appears as an overnight gap.

When there is no reason at all

Ask why the market fell on a given day and a headline will usually supply an answer. The research is more humbling. In their 1989 paper What Moves Stock Prices?, David Cutler, James Poterba and Lawrence Summers looked at the largest daily moves in the US market since World War II and found that many of them came on days with no major news, while big news often moved prices less than expected. Robert Shiller argued in 1981 that stock prices swing far more than the later changes in dividends could justify, and Richard Roll showed in 1988 that much of the variation in individual stock returns was not explained by market-wide factors or by identifiable company news.

The practical reading is not that prices are random, but that a large part of daily movement is noise: trading by people with different information, horizons and needs, around a value no one can observe directly. Over months and years, the noise averages out and the fundamentals show through. That is one reason long-run investors are told not to read too much into any single day (see Time horizon and risk tolerance: matching investments to goals), and why apparent patterns, such as stocks doing better in certain months, deserve skepticism (Calendar effects in stocks: January, sell in May and day of week).

How the forces compare

Common mistakes in reading price moves

• Explaining every move after the fact. Financial media must attach a reason to each day's close. Often the reason is a guess, and a different one would have fit as well.
• Judging news by its sign rather than its surprise. "Profits up 20%" means little until you know what was expected.
• Ignoring the market. A stock down 2% on a day the index fell 3% did relatively well. Compare against the market or the sector before concluding anything.
• Confusing a price fall with a value fall. Price drops on fear or forced selling can reverse; drops on lower expected profits often don't. Knowing which is the hard part.
• Treating one driver as the whole story. Rates matter, but in 2026 the 10-year yield rose from about 4.1% to 5.0% while the S&P 500 ETF still gained about 13% to late October, because earnings grew faster.

How Finabase shows what is moving prices

Finabase puts the main drivers on screens you can open alongside a chart:

• Earnings. The earnings calendar lists upcoming and recent reports by day for US large caps, with each company's sector, last price and change. Each symbol's Earnings tab, for example NVDA's, shows the next report date, the consensus EPS estimate, and past quarters' estimate, reported EPS and surprise, the same data used in the tables above.
• News. Headlines arrive as they break, and each symbol page has its own News tab. Discover groups stories by topic.
• Market-wide moves. The heatmap sizes S&P 500 companies by market cap and colors them by the day's move, which shows at a glance whether a fall is broad (a macro or rates day) or concentrated in one sector or company. Sectors and indices give the same view by group.
• Rates and sentiment. The Treasury page lists yields across the curve, and the VIX has its own chart.
• Movers. Performers and Trending show what is moving and what people are looking up right now.

Frequently asked questions

Why did a stock go down after good earnings?

Because the market reacts to results relative to expectations, not to the results alone. If investors expected an even better quarter, or the company's guidance for the next quarter disappointed, the stock can fall on a "beat". NVIDIA closed lower after four of its five beats from August 2025 to August 2026.

Do interest rates or earnings matter more for stock prices?

Earnings matter more over long periods, because profits compound while rates move in a range. Over months, a large change in rates can dominate: in 2022 rising yields pulled the S&P 500 ETF down about 20% even though company profits held up reasonably well.

Can one big investor move a stock price?

For a large company, rarely and only briefly, because daily trading volume is enormous. For small or thinly traded stocks, a single large order can move the price several percent. Forced buying or selling by many investors at once, such as index funds on an index change, can move even large stocks.

Why do stocks move when there is no news?

Some news is not public or not obvious, some trading is driven by flows and hedging rather than views, and many traders react to price moves themselves. Studies since the 1980s find that a large share of daily movement can't be tied to any identifiable news.

Are stock prices predictable?

Not reliably over short periods. Markets absorb public information quickly, which is the idea behind the efficient market hypothesis. Over long periods, returns have tended to track earnings growth plus cash returned, but with large swings along the way.

Summary

Stock prices move when investors change their view of a company's future cash flow or of the return they need for owning it. Earnings reports are the biggest scheduled source of company news, and in our data the day after a report moved six mega caps two to five times as much as a typical day; what counts is the surprise relative to expectations, which is why NVIDIA fell after four straight beats. Interest rates set the risk-free part of the required return, macro and policy shocks such as April 2025's tariffs shift both profits and risk premiums for the whole market, flows move prices for reasons unrelated to value, and sentiment swings the risk premium itself. A large part of daily movement has no identifiable cause. Over long horizons, though, prices have tended to follow what companies earn.