Stock Market 101

The stock market is a public market where stocks are sold to the public. Company stocks are sold in the form of shares. The more shares a person buys in a company, the higher his or her ownership is of that particular company. The stock market consists of a primary market and a secondary market. The primary market is where companies raise money for their operating expenses by selling shares to investors. The secondary market is where investors buy or sell those shares to and from other investors. Their decisions are based on constantly changing market conditions.

The stock market is made up of exchanges, like the New York Stock Exchange or the NASDAQ. There are many other regional, over-the-counter and foreign exchanges. Stocks listed on one of these exchanges bring buyers and sellers together so they can easily and quickly negotiate a price through bidding, as in an auction. The NYSE and the Nasdaq are open from 9:30 a.m. to 4 p.m. Eastern Standard Time, with premarket and after-hours trading available with some brokers.

There many indexes which track the market or segments of the stock market, such as the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Index. When people talk about whether the stock market is up or down, they are usually referring to these major exchanges. A market index can track the performance of a select list of stocks, such as the technology, health, or financial sectors. Some of the major indexes are often considered indicators of the stock market as a whole.

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