A nurse in Columbus checks her retirement app at lunch and sees the S&P 500 down half a percent. Nothing happened at her company. No earnings report, no merger, no scandal. The market simply repriced, and she is left guessing why.
The honest answer to what moves stock prices is short: a handful of scheduled events and new information about profits and interest rates. Academic work compiled in a recent review found that over roughly five decades, more than 60% of the annual U.S. equity risk premium — the extra return stocks pay for their risk — landed on just the days when major economic announcements came out. Those days made up about 13% of the trading calendar. We covered a connected angle in Tariff Pass-Through: How Import Duties Reach the Price You Pay.
Everything else, the ordinary up-and-down of a Tuesday afternoon, is mostly churn. Understanding the split between signal and noise is the first step in reading any market move, including the ones that show up in your own account. This kind of market coverage sits alongside our broader business news reporting on policy and the economy.
What actually moves stock prices day to day?
Three forces do most of the work: new information about company earnings, changes in interest rates and monetary policy, and shifts in investor sentiment about risk. Prices move when one of them changes, not when time passes.
Earnings are the most direct. A company's stock is a claim on its future profits, so any news that changes the profit outlook — a quarterly report, a guidance cut, a big contract — changes the price. Interest rates work on everything at once. When the rate investors can earn on safe assets rises, future profits are worth less today, so stock valuations get squeezed. When rates fall, the opposite happens.
Sentiment is the fuzzier force. It is the market's collective mood about how much risk is worth taking, and it can swing on headlines, geopolitics or nothing identifiable at all. The practical takeaway: if you cannot name the earnings, rate or sentiment change behind a move, treat it as noise.
Do scheduled announcements matter more than ordinary days?
The evidence says yes, and by a wide margin. According to a review of the research compiled at Note, a study by Pavel Savor and Mungo Wilson published in the Journal of Financial and Quantitative Analysis examined U.S. stocks from 1958 to 2009 and compared ordinary days with scheduled announcement days — when inflation figures, the employment report or Federal Reserve decisions came out.
The average excess return on announcement days was 11.4 basis points, against 1.1 basis points on all other days. That is roughly a tenfold difference. A basis point is one hundredth of a percent, so the gap looks small until you add it up: announcement days were about 13% of trading days, yet they carried more than 60% of the annual equity risk premium. The Sharpe ratio, a measure of return earned per unit of risk, was about ten times higher on those days.
The authors' interpretation is that investors demand compensation for holding stocks on days when the economic outlook could change sharply depending on the result. The market pays for the risk of the announcement, not the announcement itself.
What is the pre-FOMC drift, and does it still exist?
The Federal Open Market Committee, the Fed body that sets the U.S. policy interest rate, meets about eight times a year. One of the most discussed findings in this literature concerns the day before its announcements.
According to the same Note review, economists David Lucca and Emanuel Moench — both then at the Federal Reserve Bank of New York — published a 2015 study in the Journal of Finance finding that from September 1994 to March 2011, the S&P 500 rose an average of 0.49% in the 24 hours before a regular FOMC announcement. That quiet climb accounted for roughly 80% of the annual excess return of U.S. stocks over the period. A hypothetical strategy of holding stocks only during those pre-announcement windows, a few days a year, would have captured most of the gains of full-time ownership, with an annualized Sharpe ratio of 1.1 or higher.
The same pattern did not appear in Treasury bonds, short-term interest rate futures, or before other economic reports such as the employment release. The authors themselves called it a puzzle that standard asset pricing theory struggles to explain.
Here is the caution: the drift largely faded. The review reports that the pattern had almost disappeared in data from 2016 to 2019, and the reviewer's own ratings distinguish between what held during the original study period and what survived against newer data. A pattern that worked for seventeen years is not a pattern that works forever — a point worth remembering before anyone treats a published anomaly as a trading rule.
What this means for anyone watching the market
Our analysis of this evidence points to a simple discipline. When the market moves sharply, ask which category the cause belongs to.
- Scheduled news: Fed decisions, inflation readings, employment reports. These are the days the research shows carrying the returns. Mark them in advance rather than reacting after the fact.
- Company information: earnings and guidance. This moves individual stocks and, in aggregate, the indexes they sit in.
- Policy shocks: tariffs, regulation, fiscal standoffs. These change the profit outlook across whole sectors, which is why coverage of things like how import duties reach the prices consumers pay is market news too.
Rate expectations deserve their own note. The Fed's stance filters into stock valuations directly, which is why a meeting that ends with rates on hold can still move prices — the statement and the projections tell markets what comes next. Our earlier coverage of a Fed meeting that held rates steady shows how much rides on the language around the decision, not just the decision.
Fiscal deadlines work the same way. A debt-limit standoff does not change any company's earnings this quarter, but it changes the perceived risk of holding U.S. assets at all, and that repricing shows up in stock prices. The mechanics are laid out in our explainer on what the X-date actually does to markets. For related coverage, see Debt Limit Mechanics: What the X-Date Actually Does to Markets.
Where the evidence stops
What the research establishes is concentration: stock returns cluster heavily around scheduled, high-stakes information events, and the pre-FOMC rise was real for the period studied. What it does not establish is a durable trading rule. The drift's disappearance in later data is a reminder that markets adapt, and the underlying papers describe the mechanism as unresolved rather than explained.
For the reader with a retirement account, the practical conclusion is modest. Most daily movement is noise. The moves worth understanding trace to earnings, rates and scheduled announcements — and knowing the calendar matters more than reacting to the ticker.
