Why did the price change today?

Look up your anchor company again. Its price is different from yesterday — maybe a little, maybe a lot. Nobody changed a price tag in a back office. So what happened?

Prices are agreements, not labels

A share's price is simply the last price at which a buyer and a seller agreed to trade. That's the whole secret. When more people want to buy than sell, buyers must offer more to get filled — the price drifts up. When more want to sell, they must accept less — it drifts down.

So the question "why did it move?" really means: "what changed people's willingness to buy or sell today?"

The usual suspects

• Company news. A strong quarterly report, a new product, a factory problem, a lawsuit. Direct information about future profits.
• Industry news. A competitor stumbles, a regulation changes, a supplier raises prices. Your company moves even when the news isn't about it.
• The whole market's mood. On some days almost everything rises or falls together — interest-rate decisions, inflation numbers, geopolitics. Your company floats on that tide.
• Nothing in particular. Small daily wiggles are normal. Millions of participants adjusting positions create motion without any headline.

How much of a move is the tide?

Enough that it is worth subtracting. For a typical large company a sizeable share of its day-to-day movement — the proportion varies a lot from stock to stock and from day to day — is simply the whole market's movement, passed through. Professionals estimate the pass-through from history — beta, which you will meet properly later — and use it to size the tide: a stock that has tended to move 1.2% for every 1% the market moves "should" move about 2.4% on a day the market moved 2%. That is a model's guess built on the past, not a law for today. Whatever is left over after that subtraction is the part the market's move does not explain — which may be the company, but may just as well be its sector, a fashion in the kind of stock it is, or plain noise — and it is often smaller than the headline made it sound. The subtraction tells you how much of the story is not the tide; it does not tell you what the rest is.

An honest habit from day one

After the fact, humans love inventing tidy stories ("it fell because of X"). Real answers are often a mix of the reasons above — and sometimes unknowable. The professional habit is to say: "price moved; here are plausible reasons; I can't be certain which dominated." You will see career analysts do exactly this.

Try it now

One company over the past month:

And the broad US market over exactly the same month (you will formally meet indices soon — for now, treat this as "the average of the whole market"):

1. Pick one day where the first chart moved sharply and find that same day on the second.
2. Measure that single session on each chart and write the two percentages side by side. Did the company move with the market, or against it?
3. Moving with the market suggests tide; moving against it suggests something company-specific. Say which you are looking at, and say you cannot be certain — that hedge is the professional habit, not a weakness.
4. Do it twice more, on two other days. One comparison is an anecdote; three is the beginning of a habit.

You have just performed your first piece of real market analysis — the same first step a professional takes.

Build it yourself

Build the tool that answers this every morning for the instruments you actually hold. Your tickers, in one call