Major Stock Markets and Indexes

Stock Markets

The New York Stock Exchange (NYSE)

About

The New York Stock Exchange (also known as: NYSE), is the world’s largest securities exchange. They sell 9.3 million stocks and other securities a day. All of their stock transactions are auctioned.

Fun Fact: Most of the NYSE's 10,000,000,000 transactions happen electronically.

Trading

The NYSE uses two methods of trading: brokers and all-electronic. The brokers will set the “bid" price and the buyer buys it. When your stockbroker executes your order to sell, it is not completed until one of the dealers on the floor of the NYSE finds another broker that wants to buy the stock. When you buy stock on a computer, the computer acts as the dealer. All brokers and dealers must get approval from the NYSE and have a trading license.

Hours of the NYSE

At the NYSE, the opening bell rings at 9:30 AM Eastern Time, and the closing bell rings at 4:00 PM Eastern Time. The tradition of ringing a bell began in 1870 with a Chinese gong. But in 1903, the NYSE switched to brass bells. It is now considered a honor to be invited to ring the bell.

Holidays

The NYSE closes on:

  • New Year’s Day
  • Martin Luther King Day
  • Washington’s Birthday
  • Good Friday
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas

The NYSE closes at 1:00 PM Eastern Time on:

  • Black Friday
  • July 3rd
  • Christmas Eve

History

Between 1600 and 1950

The NYSE officially began on May 17th, 1792, under a buttonwood tree on 68 Wall Street. The first stock sold under the buttonwood tree was from the Bank of New York. The NYSE was originally named the New York Stock & Exchange Board.

Between 1951 & 2020

  • February 18, 1971: The NYSE became a not-for-profit company
  • April, 2006: The NYSE became a publicly traded company
  • 2007: Merged with Euronext
  • 2008 Acquired the American Stock Exchange (ASE)

National Association Securities Dealers and Quotations System (NASDAQ)

About

The NASDAQ is meant for tech companies, but also trades banking companies, airline companies, Starbucks, and shoe companies . The NASDAQ is the first electronic exchange and about 3,000 companies are traded there.

NASDAQ - Major Companies Traded Here

  • Apple
  • Amazon
  • Microsoft
  • Facebook
  • Gilead Sciences
  • Intel
  • Oracle

History: 1900 - 2000

In 1971, the National Association of Securities Dealers set out to create the world’s first electronic stock market. On February 7th, 1971, the NASDAQ opened, but could not execute trades. Instead it provided automated quotations.

History: NOW

The NASDAQ lists more than 3,700 companies and boasts the highest trade volume in the US market. Also, more than $10,00,000,000,000 worth of companies are traded on the the NASDAQ.

Trading Hours

The NASDAQ opens at 9:00 AM Eastern Time, and closes at 4:30 PM Eastern Time. But unlike any other stock market, the NASDAQ offer’s “pre-market" and “post-market" hours. The “pre-market" hours are from 4:00 AM to 9:30 AM Eastern Time. The “post-market" hours are from 4:30 PM to 8:00 PM Eastern Time.

Stock Indexes

Standards and Poor’s 500 (S&P 500)

About

The S&P 500 tracks 500 large U.S. companies and represents roughly 70% of all the stocks that are publicly traded. Over the past 10 years, the S&P 500 has returned 9.49% per year, but in 2017, it returned 21.83%.

How it Works

The S&P 500 tracks the market capitalization of the companies in tis index. The total market capitalization of the S&P 500 is $23,500,000,000,000. The S&P 500 includes real estate investment trusts and business development companies.

The S&P 500 balances the index quarterly in March, June, September, and December. To qualify for the S&P 500 a company must be in the US, have a market capitalization of at least $6,100,000,000, at least 50% of the companies stock must be available to the public, price must be at least $1 per share, must file a 10-K annual report, have at least 50% of its fixed assets and revenues must be in the US, and the stock must be listed on the NYSE, Investors Exchange, NASDAQ, or BATS.

The 10 Largest Companies in 2017

  • Apple
  • Microsoft
  • Amazon
  • Berkshire Hathaway B
  • Facebook
  • JP Morgan Chase
  • Johnson & Johnson
  • Exxon Mobil
  • Alphabet C, formerly Google
  • Alphabet A

2017 Sector Breakdown

  • Information Technology: 24.9%
  • Financials: 14.7%
  • Health Care: 13.7%
  • Consumer Discretionary: 12.7%
  • Industrials:10.2%
  • Consumer Staples: 7.7%
  • Energy: 5.7%
  • Utilities: 2.9%
  • Materials: 2.9%
  • Real Estate: 2.8%
  • Telecom Services: 1.9%

How the S&P 500 is Different from Other Stock Market Indexes

There are only 2 ways the S&P 500 is different from the Dow Jones and the NASDAQ. The S&P 500:

  1. has more large-cap stocks than the Dow Jones,
  2. and has fewer tech-related stocks than the NASDAQ.

The Dow Jones Industrial Average

About

The Dow Jones is named after Charles Dow, and is the leading indicator of market health. The Dow Jones tracks the 30 largest Us companies.

How it is Calculated

The Dow Jones is calculated by adding up the stock prices of all companies in each index and dividing it by the number of companies. Also, the Dow Jones averages don’t take into account the number of shares outstanding.

Fun Fact: The Dow Jones and S&P 500 move together.

The Dow Jones - The 30 Companies

  1. 3M
  2. American Express
  3. Apple
  4. Boeing
  5. Caterpillar
  6. Chevron
  7. Cisco
  8. Coca-Cola
  9. Disney
  10. E! DuPont De Nemours & Co
  11. Exxon Mobil
  12. Goldman Sachs
  13. Home Depot
  14. IBM
  15. Intel
  16. Johnson & Johnson
  17. JP Morgan Chase
  18. McDonald’s
  19. Merck
  20. Microsoft
  21. Nike
  22. Pfizer
  23. Procter & Gamble
  24. Travelers Companies
  25. United Technologies
  26. UnitedHealth
  27. Verizon
  28. Visa
  29. Walgreens Boots Alliance
  30. Walmart

The History of the Dow Jones

The Dow Jones was created by Charles Dow (the founder of the Wall Street Journal) and a statistician named Edward Jones. On February 16, 1885, the Dow Jones began publishing a list of 12 stocks, there were:

  • 2 Industrial Companies
  • 10 Railroad Companies

Here's what the companies were and what happened to them:

  1. American Cotton Oil became part of Best Foods
  2. American Sugar was turned into Amstar Holdings
  3. American Tobacco was broken up by 1911 antitrust action
  4. Chicago Gas is now part of People Energy
  5. Distilling & Cattle Feeding was turned into Millennium Chemical
  6. General Electric remained in DJIA until 2018 when it was replaced by Walgreens Boots
  7. Laclede Gas is still in business but dropped from Dow in 1899
  8. National Lead is now NL Industries, removed from Dow in 1916
  9. North American was a utility broken up in the 1940s
  10. Tennessee Coal & Iron was bought by U.S. Steel in 1907
  11. U.S. Leather Pfd. was dissolved in 1952
  12. U.S. Rubber is now part of Michelin

By 1889, the Dow Jones expanded to 8 more industrial companies.

The Dow Jones Industrial Average has expanded and now list's 30 companies.

The Dow Jones - Milestones

  • January 12, 1906: The Dow Jones closed above 100
  • March 12, 1956: The Dow Jones reach its next landmark of 500
  • November 14, 1972: The Dow Jones reached its next landmark of 1,000
  • 1987: The Dow Jones reached its next landmark of 2,000
  • February 23, 1995: The Dow Jones reached its next landmark of 4,000
  • March 29, 1999The Dow Jones reached its next landmark of 10,000
  • October 9, 2007: The Dow Jones reached a peak of 14,164.43
  • March 5, 2009: The Dow Jones plummeted 80% to 6,594.44
  • March 11, 2013: The Dow Jones regained its pre-recession when it hit 14,254.38
  • May 7, 2013: The Dow Jones closed above 15,000 when it hit 15,056.20
  • January 25, 2017: The Dow Jones exceeded 20,000 when it closed at 20,068.51
  • October 3, 2018: The Dow Jones’ highest closing record is 26,828.39

Other Dow Jones Averages

  • The DJTA (Dow Jones Transportation Average): Tracks Airline, trucking, and shipping companies.
  • The DJUA (Dow Jones Utility Average): Tracks 15 utility stocks.

The Russell 2000

About

The Russell 2000 focuses on small companies. This index follows 2,000 of the smallest companies in the stock market. The Russell 2000 has a sister index called the Russell 3000, and is made up of the bottom two-thirds of the Russell 300 index.

History

  • 1984: Created by the Frank russell Company
  • December 31, 2017: the average value of a company on the Russell 2000 is $2.4 Billion.