US stocks, and the US stock markets are some of the most important in the world. They provide a place for buying and selling stocks, and they also set the tone for global trading. When the US stock markets are doing well, it usually means that other markets around the world are also doing well. This is why many people choose to invest in US stocks even from overseas regions that have their own indexes.
The US markets can be a highly effective location to invest in or trade, with huge volumes traded. When trading US stocks from overseas it can be made simple, just as long as you know how to gain access.
In this guide, we are going to simplify the US stock markets by breaking down the various US stock exchanges, alongside the main US stock indices that you may be looking to trade or invest in.
By the time you finish reading, you should know how the US stock markets are set up, and then simply be able to navigate through the page that takes you through how to engage with US stocks from wherever in the World you are.
US Stocks & Stock Markets Introduction
There are a few things to keep in mind when buying US stocks.
Firstly, it’s important to understand the different types of stock markets.
The three main exchanges are the Nasdaq, the New York Stock Exchange, and the NYSE American (American Stock Exchange). The Nasdaq is where most big tech stocks are traded, while the NYSE is home to many blue chip companies.
Another thing to consider is the time of day that you’re buying stocks. The US markets are open from 9:30am to 4:00pm EST, and trading is usually busiest during the first few hours of the day. Many people ask what time the US stock market opens for exactly this reason. If you’re buying stocks during off-peak hours, you may not get the best price as liquidity can be lower.
Finally, it’s important to remember that the US stock markets can be volatile. This means that prices can go up and down very quickly. Many people also trade US stocks with leverage in either CFD, futures, or options contracts. If you’re not comfortable with this type of risk, you may want to consider exactly how you engage in investing in US stocks.
Despite the risks in any area of trading or investing, many people still choose to invest in US stocks. This is because they have the potential to deliver high returns. If you’re considering buying US stocks, be sure to do your research and understand the risks involved.
US Stock Exchanges
National Association of Securities Dealers Automated Quotations (NASDAQ)
The National Association of Securities Dealers Automated Quotations NASDAQ stock exchange is the largest electronic buying and selling market for stocks in the United States. There are more than 3,500 companies listed with a combined market capitalization of over $22 trillion.
Having been founded all the way back in 1971, the Nasdaq is open for trading Monday through Friday from 9:30am to 4:00pm EST. To buy or sell shares directly on the Nasdaq, you must have a broker that is a member of the exchange. There are also a growing number of respected online brokers and trading platforms that can provide direct market access.
Many big tech firms are listed on the Nasdaq, along with a host of other major names. Some of the largest companies listed include Apple, Microsoft, Amazon, Meta (Facebook), Alphabet (Google), Berkshire Hathaway, JPMorgan Chase & Co, Johnson & Johnson, and Visa.
The two main ways to trade stocks on the Nasdaq are buying directly from another investor through an online broker, or buying through a market maker. Market makers are firms that act as intermediaries between buyers and sellers, quoting prices at which they are willing to buy and sell stocks usually for a fee.
As an electronic exchange, the Nasdaq does not have a physical trading floor.
New York Stock Exchange (NYSE)
The New York Stock Exchange is the largest stock exchange in the world, with a market capitalization of over $28 trillion. It is located at 11 Wall Street in Lower Manhattan, New York City and is home to some of the largest and most well-known companies in the world from a variety of sectors.
There are now more than 2,400 stocks listed on the NYSE. This includes companies from a variety of industries, such as technology, healthcare, finance, and consumer goods. If you’re looking to buy or trade stocks in the United States, the New York Stock Exchange (NYSE) is one of the most popular exchanges to consider.
Buying stocks on the NYSE can be a bit different than buying stocks on other exchanges for the professionals. This is because the NYSE is a physical exchange, which means that trades are made in person. For retail users, buying stocks on the NYSE will not be any different than using other brokers as they make the trade directly via the data center instead of the physical location.
As a stock exchange with huge daily trading volume, you will find plenty of liquidity in any NYSE trades or investments.
NYSE American, Previously American Stock Exchange (AMEX)
The American Stock Exchange was one of the oldest stock exchanges in the United States. It was founded in 1842 and is located in New York City. Having been acquired by NYSE in 2008, the AMEX is now known as NYSE American.
The American Stock Exchange offers two types of marketplaces: an exchange-traded marketplace and an OTC marketplace. The exchange-traded marketplace is for buying and selling stocks that are listed on the American Stock Exchange. The OTC marketplace is for buying and selling stocks that are not listed on the American Stock Exchange.
The American Stock Exchange has a wide variety of products that you can trade, including stocks, options, ETFs, and mutual funds. The majority of companies listed are smaller cap companies that are intent on growth.
If you want to buy or sell stocks on the American Stock Exchange, you will need to open an account with a broker that offers access to the American Stock Exchange. Most brokers that offer access to the New York Stock Exchange will also offer access to the NYSE American.
US Stocks Indices
There are several key stock market indexes in the United States, each of which offers a different perspective on the overall performance of the US stock market.
The Dow Jones Industrial Average (DJIA) is perhaps the best-known US stock market index. It measures the performance of 30 large, publicly-listed companies across a range of industries.
The S&P 500 Index is another widely-followed US stock market index. It comprises 500 large US companies, representing a cross-section of different industries.
The Nasdaq Composite Index is a third major US stock market index. It includes all stocks traded on the Nasdaq Stock Market, including both small and large cap companies.
Nasdaq Indices (Nasdaq Composite .IXIC)
The Nasdaq is one of the largest stock exchanges in the world, as well as being the name of indices that are traded and invested in the world over. Many companies listed on the Nasdaq are leaders in their respective industries, and their stocks are some of the most traded on the Nasdaq.
Indices on the Nasdaq are divided into three main sections: the Nasdaq Composite (.IXIC), the nasdaq 100 (NDX), and the Nasdaq Biotech (NBI). The Nasdaq Composite is made up of all the stocks listed on the Nasdaq, including both large and small companies and is the most commonly traded.
The Nasdaq 100 is made up of the 100 largest companies on the Nasdaq, and it is weighted by market capitalization. The Nasdaq Biotech is made up of companies classified as biotech and pharmaceuticals for those interested in gaining access to these sectors.
Dow Jones Industrial Average (DJIA)
The Dow Jones Industrial Average (DJIA) is one of the most widely-watched stock market indices in the world. It consists of 30 large US companies, and is often seen as a key indicator of the overall health of the US stock market. Some of the largest companies that form part of the Dow Jones include Apple, ExxonMobil, Goldman Sachs, IBM, and Walmart.
The Dow Jones Industrial Average is calculated by taking the stock prices of each of the 30 companies that form part of the index, and then finding the average. The DJIA is a “price-weighted” index, which means that companies with higher stock prices have a greater impact on the overall value of the index.
S&P 500 Index (.INX)
The S&P 500 was launched in 1957, and it is currently managed by S&P Dow Jones Indices. As a capitalization-weighted index, the S&P 500 is one where the larger companies have a greater impact on the index’s performance.
The composition of the the S&P 500 is simply the 500 largest companies by market capitalization that are listed on American stock exchanges that have met certain other conditions. There are a wide range of companies, from large multinational corporations to small-cap companies that are also split into 11 sectors.
The S&P 500 is considered to be a leading indicator of the US stock market, and it is widely used by investors and analysts to gauge the performance of the market in general. As one of the most widely followed stock market indices in the world, the S&P 500 is used as a benchmark by many investment professionals and novices alike.
US stock market, and US stock exchanges Summary
The three US indices we have covered above are just a few of the many US stock market indexes, namely those that are the most traded and invested in.
Other notable indices include the Russell 2000 Index (small cap companies), the Wilshire 5000 Total Market Index (all publicly-listed US companies) and the Lehman Brothers Aggregate Bond Index (US government, corporate and mortgage-backed bonds).
US Indices Are For Trading Or Benchmarking, The US Stock Exchanges Are Where US Stocks Are Listed
The US stock exchanges we have covered above are the venue for stocks themselves. In essence the place where the purchase happens from.
When people talk about how the markets are performing, they are usually referring to the ‘index’ or group of indices. This is the ‘group of companies’ that you can trade in collectively, like a fund.
As a trader, you can use these indexes as a way to track the overall performance of the US stock market, or to compare the performance of different segments of the market.
For example, if the DJIA is up but the S&P 500 is down, this may indicate that large cap stocks are outperforming small cap stocks. The same can be said of the Russell 2000 index which is often used as a wider barometer of the US economy and of smaller cap companies that usually have a higher concentration of revenue from within the US than from exports and International business.
Indexes can also be used as a benchmark for investment purposes that other funds or traders will want to outperform. If the stock market on the whole is up by x%, then a good stock broker or stock picker will want to see at least a significant return above x in order to ‘outperform the market’.
Now you know hopefully at least a little more about the ins and outs of US stocks, indices, and exchanges. If you would like to take the next step and uncover how to trade or buy US stocks from your own Country, see the resources below.