If you've ever taken an economics class, you've heard of "supply and demand."  If there is too much demand for anything, prices go up; too much supply, prices go down.

• Let's look at demand (causing prices to go UP):  
  Simply put, if there's more demand for a stock, it's price goes up, and if there's less, it goes down. But how does it do that? Think of stock trading as "real time supply and demand" where stock prices can change every second (especially now that electronic trading allows computers to communicate changing prices almost instantly, without a noticeable delay after the trade). Okay, but back to HOW this actually happens.

Think of it this way... A trader represents a big mutual fund that is VERY interested in buying 100,000 shares of Apple by the end of the day. In fact, he has to because it is the last day of the quarter, and he has to show that amount of Apple stock in his report to his investors. Okay, so the trader puts in the order at 3:30 pm for $200 a share (and the market closes at 4pm). At 3:50pm, the price has not come down to the $200 a share that he wants to pay, and the sellers are asking $206, even though the current price is just $205. Again, the current price is $205 a share, but the lowest "ASK" price is $206. That mutual fund manager is running out of time. He can't risk it. He calls his trader and tells him to increase his "BID" price to $206 so that he is sure to get his stock for his mutual fund. His trade has just made the stock "go up" to $206 a share, where it closes for the day as the last trade price (i.e., the "closing price" for the stock).

• Now let's look at supply (causing prices to go DOWN):  
  If XYZ Laptops had its IPO at 1 million shares, and it is currently trading at $22 a share, that calculates the company's total worth, or what is known as "market capitalization" (i.e., also known as Market Cap), is $22 million. They need to raise more money for another laptop that they have developed. So they decide to put together a Secondary Offering of more shares of stock. They are essentially increasing the "supply" of stock that is available to trade. They are doubling their outstanding shares of stock. This action dilutes, or reduces, the value of each share that is currently held by existing shareholders. In fact, it immediately cuts each share value in half by diluting the value of the shares that they own. Therefore, the stock dramatically goes down on the news that they are doubling their shares outstanding by offering 1 million more shares, taking the total shares outstanding to 2 million shares. The stock price plummets on this news to $15 a share. Why not exactly half, to $11. That has to do with the speculation that some investors believe that, by raising this money for further investment, the company will do better in the future, so there is some optimism mixed in to keep it from going all the way down to $11 a share.
  
  But that is how the stock price can go down. Of course, if the opposite of the demand example were to happen - that the mutual fund manager had to sell his stock position before 4pm that day - the same effect would occur, except it would be exactly the opposite. At the last minute, he would sell his stock for LESS than he wanted to sell, and the stock price would go down.