Stock prices rise or fall based on the balance between supply and demand in the market. When more investors want to buy a stock than sell it, the price goes up. When more people want to sell than buy, the price drops. This balance is influenced by several key factors.

Company performance is one of the main drivers. Strong earnings reports, revenue growth, and positive future guidance attract investors, pushing the price higher. On the other hand, weak results or negative news can lower investor confidence and cause a sell-off.

Economic conditions also play a major role. Factors like interest rates, inflation, and GDP growth affect how investors value companies. For example, lower interest rates often make stocks more attractive compared to bonds, leading to higher prices.

Market sentiment and investor psychology are equally powerful. News events, political uncertainty, or global crises can lead to fear or optimism, driving quick price movements. Speculation and rumours can also cause short-term volatility even if a company’s fundamentals remain unchanged.

External factors such as technological changes, competition, and government policies can impact a company’s outlook and, therefore, its stock price. In the end, stock prices fluctuate because they reflect collective investor expectations about a company’s future performance and the overall economic environment.