Changes in Earnings

• The purpose of any publicly traded corporation is to generate earnings. Each quarter, companies announce earnings, and the share price fluctuates based on whether the performance met, exceeded or fell short of expectations.
  
  

Multiple Contraction/Expansion

• To value a company's future earnings, analysts apply a multiple based on numerous factors. As these conditions change, this price to earnings multiple will expand or contract, causing the share price to fluctuate even if earnings remain constant.
  
  

Availability of Credit

• Investors need available credit to fund their stock purchases, and sustain high price to earnings multiples. Consumers who cannot get credit easily will consume less, forcing companies to cut costs and produce less to maintain their accustomed level of earnings.
  
  

Sentiment

• Expectations about the economy color how investors see individual stocks and interpret news. But sentiment is often reinforcing, with investors reacting to positive action with more enthusiasm and vice versa. Markets tend to overshoot irrationally, evidence that a good bit of stock fluctuation is driven by raw emotion.
  
  

Interest Rates

• Low interest rates amount to cheap credit, and tend to fuel economic expansion and optimism. As interest rates rise, cash and fixed income assets become more competitive, and drive investment away from stocks.