What moves stock prices?

People move stock prices. Allow me to add some color.

A bunch of (eccentric) people are sitting across the aisle from each other, holding up signs. On one side (the bid side), people are offering to buy a certain stock at Rs. 4.99/share. On the other side (the ask side), a group silently sits with their arms folded, demanding Rs.5.00.

Like some grim parliament, rows of stadium seating extend as far as the eye can see on both sides. Someone far back on the bid side holds a sign saying Rs.4.83. He will only buy a share if someone offers it for the price he wants.

Somewhere far back on the ask side, someone waves a sign that says Rs.5.50. He would never sell for less.

A buyer walks into the middle of this strange ritual and, thinking that Rs.5.00 is quite fair for a share of XYZ (for whatever reason), purchases a share from the ask side.

A no-less-grim man with a chalkboard records the sale. One share was transacted for Rs.5.00. This is now the "market price."

Now, in comes a seller. He would happily get rid of his share for Rs.4.99, and so he approaches the bid side and sells his share to one of the bidders. For what it's worth, the market price is now Rs.4.99.

Hark! The sound of patent leather soles! In marches a rotund man with a wig, waving some indecent volume of cash, offering to buy however many shares his money will get him.

He buys up every share from the ask's first (Rs.5.00), second (Rs.5.01), third (Rs.5.02), and even some of the fourth (Rs.5.03) rows!

Now, the market price is Rs.5.03, and the remaining gentlemen asking for Rs.5.03move up to the front row of the ask side, waving their signs. The others from the ask side have already exited with cash in hand.

Amidst the confusion, some from the bid side's front row are pushed back by fresh bidders, who are now willing to pay anywhere from Rs.5.00 to Rs.5.02 for what was, only a few brief moments ago, a Rs.4.99 stock. Somehow or another, they hope to profit by this move.

Others, confused, scared, or disgusted, simply leave. At least one gentleman is running wildly between the two camps, yelling absurd things and waving several signs.

Two seconds have elapsed in the market since we began this story, and a lot has changed. Except, well, one very important thing hasn't changed at all:

A bunch of (eccentric) people are (still) sitting across the aisle from each other, holding up signs.