A share price moves because someone is willing to trade at a new price, and the four most common reasons that happen are results against expectation, guidance about what’s next, the level of interest rates, and news about the sector a company sits in.
Results move a price relative to what was already expected, not relative to how the company is actually doing. Earnings per share, a public company’s net profit divided by its common shares outstanding, is watched company by company each quarter, but the market has usually already built an expectation for that number into the price beforehand. A company that reports higher profit than last year but lower profit than analysts expected can still see its price fall, because the trade that sets a new price is being made by people who already knew growth was coming and were pricing in more of it. This is why financial reporting distinguishes a beat from a miss as its own fact, separate from whether a number went up or down in absolute terms.
Guidance, a company’s own forecast of its future results, moves prices for the same reason, and the SEC built a rule specifically to keep that information from reaching some investors before others. Adopted in 2000, Regulation FD requires that when a company discloses material nonpublic information, such as guidance shared with analysts on a call, it has to make that same information public at the same time or promptly afterward. The rule’s own adopting release explains why: the SEC found that selective disclosure let some market participants trade on an “unerodable informational advantage” over everyone else, which is precisely the kind of information a company’s guidance represents until it’s made public.
Interest rates move prices through a more mechanical channel: a share’s value is a bet on profit the company hasn’t earned yet, discounted back to what that future profit is worth today. Higher rates make that discount steeper, because money promised further in the future is worth comparatively less when safer, interest-paying alternatives pay more right now. That’s a reason a rate announcement from a central bank can move share prices across an entire market on the same day, for companies that had no news of their own to report; it isn’t that anything about those companies changed, it’s that the value of a dollar of their future profit changed. Sector-wide moves work similarly in reverse: a piece of news about a large company can reprice smaller companies in the same business, since traders read it as information about shared costs, shared customers, or shared competitive pressure across the group, not only about the company that reported it.
Volatility is simply how much a price swings over some window, most simply measured by looking at the size of each period’s percentage change and how much those changes vary. Drawdown measures something related but distinct: the percentage decline from a price’s highest point in a window to its lowest point afterward, before it recovers. If a stock peaks at $100 and later falls to $70 before turning back up, that’s a 30% drawdown, regardless of how choppy or smooth the path between those two points was. Investor.gov’s own glossary defines a bear market using exactly this kind of threshold: “a broad market index falls by 20% or more over at least a two-month period.” The two-month floor in that definition matters as much as the 20% figure. It’s there specifically so a single terrible week isn’t mistaken for a bear market; a formal definition of a downturn has to specify how long the decline has to hold up before it counts as one, which is the same discipline worth applying to any drawdown you’re reading about, not just the ones with an official name.