Identification

• In the U.S., stocks are traded in dollars and cents. When the share price rises, a stock becomes more expensive to buy. The higher a stock price becomes, the more profit an investor will make when the stock is sold.
  
  

Causes

• Investing is not an exact science, and there is no formula for higher stock prices. There are certain conditions, however, that tend to send stocks higher. If a pharmaceutical company receives U.S. FDA approval for a new drug, for instance, the stock price is likely to rise. When companies report growing profits, this tends to raise the price of those stocks.
  
  

Effects

• When stock prices increase in value, wealth is created in the stock market. Investors often flock into equities, which are stocks, from more conservative investments, like bonds, when returns in the stock market are rewarding.
  
  

Considerations

• Stocks can fall just as quickly as they rise. This is called volatility, and the financial markets go through periods of these highs and lows. Even high-quality stocks experience declines, but if they are sound investments, these stocks eventually rebound.
  
  

Size

• The U.S. stock market experienced its best point gain in a session on October 13, 2008, when the Dow Jones Industrial Average rallied 976 points. Earlier that year, the stock market was seized by a global credit crisis, and stocks rallied on this October day because of signs that the worst of the crisis was over, according to CNN.