As mentioned in the previous article, the stock market or stock market is the organization that represents shares in publicly traded companies and aggregates securities called stocks.
In the United States, the two largest stock exchanges in the world are the New York Stock Exchange (NYSE) and (NASDAQ), which include the largest and most popular globally traded and highly-traded companies. A destination for investors wishing to enter the world of trade and investment. In this article, we will learn more about the US stock market.
US stock market start
The beginning was with the NYSE, which was founded in 1792, and this was not the first American stock exchange, before that it was the Philadelphia Stock Exchange PSE.
But the New York Stock Exchange quickly grew and developed into the main stock market in the world, and not only in the United States, and it depended on growth from the beginning on the strength of the ever-growing American economy.
In the late twentieth century, with the development and expansion of the idea of shares trading in many other stock exchanges around the world, the Nasdaq Stock Exchange emerged strongly as the first exchange operating with an electronic network that conducts transactions electronically.
It spurred the era of e-commerce and made the entire commerce process more efficient and cost-effective, making it a preferred home for tech giants and gaining prominence during the technology boom of the 80s and 90s.
US market hours
Regular trading hours for the New York Stock Exchange (NYSE) and Nasdaq are 9:30 AM – 4:00 PM ET – UTC -4 or UTC -4, Monday through Friday excluding holidays. and early closing days when common stock trading ends at 1 p.m. ET.
Also, trading can take place outside regular stock market hours. There is a “before the market” trade. The clock can stretch until 4:00 PM ET and move into the market session at 9:30 AM, followed by “after-market” sessions that run from 4:00 PM ET to 8:00 PM ET.
US stock markets
Stocks, commodities, derivatives, and other US financial instruments are traded on the exchange. In the past, traders and brokers would meet in the stock market to trade stocks, and now most of the financial trading is done electronically and automatically.
There are two large stocks in the USA which are the New York Stock Exchange and the Nasdaq.
New York Stock Exchange (NYSE)
The New York Stock Exchange merged with the European stock exchange known as Euronext to form what is now NYSE Euronext. For a company to be listed on the New York Stock Exchange, the company must own more than $4 million in stock.
NASDAQ
It stands for “National Association of Securities Dealers Automated Quotation System” and is the largest electronic bid-based market. Founded in 1971, the company is known for its computerized system and is relatively modern compared to the New York Stock Exchange. It currently offers lower listing fees than the New York Stock Exchange and features some of the biggest companies in technology specifically.
The US market includes other similar smaller exchanges, such as:
- Chicago Options Exchange (CBOE)
- It is owned by the Chicago Board of Trade (CBOT) – CME. Collection
- Chicago Mercantile Exchange (CME)
- Chicago Stock Exchange (CHX)
US market segments
Before looking for ways to trade in the stock market, it is necessary to identify the different sectors of the stock market, to understand the nature of the market, the mechanism of diversification, and how to classify the market.
Sector, as defined in the stock market, means the group of stocks that share many characteristics and qualities and are generally in similar industries or fields.
Stocks are segmented to facilitate comparison between companies with similar business models, and this is taken into account when considering investing in stocks or when it has an impact on markets related to a particular area of the economy.
According to GICS, there are 11 sectors, 24 industry groups, 69 industries, and 158 sub-domains in which all large public companies are classified. The following are examples of US market sectors and the most important US stocks listed in them:
1. Technology sector
They include information and technology innovation companies, software and hardware providers, equipment-building computing and Internet equipment, semiconductor components, device manufacturers, and equipment used to manufacture semiconductor chips.
The most famous companies in the industry
- Apple (AAPL)
- Microsoft (MSFT)
- Alphabet (Google) (GOOG)
- Amazon (AMZN)
2. Financial sector
It includes financial companies such as investment and commercial banks, insurance companies, and financial service providers, as well as asset management companies and brokers
The most famous companies in the industry
- (V) visa
- JPMorgan Chase (JPM)
- Bank of America (BAC)
- MasterCard (Master)
3. Health sector
Pharmaceutical, therapeutic, and biopharmaceutical businesses include healthcare equipment and services, including analytical instruments and supplies for clinical trials, surgical supplies, medical diagnostic tools, and health insurance.
The most famous companies in the industry
- United Health Group
- Pfizer (PFE)
- Roche Holdings AG (RHBBY)
- Johnson & Johnson (JNJ)
4. Basic material sector
They include companies involved in the manufacture of building materials, chemicals, paper, glass, timber, metals, and mining companies.
The most famous companies in the industry
- BHP Group Ltd (BHP)
- Linde PLC (LIN)
- Rio Tinto plc (Rio)
- Air Liquide SA (AIQUY)
5. Public Services Sector
It includes virtually all utilities, residential and commercial electric power providers, and natural gas transmission and distribution companies. Water distribution companies, renewable energy, and independent electricity producers
The most famous companies in the industry
- NextEra Energy (NEE)
- American Water Company (AWK)
- Dominion Energy (D)
- Duke Energy (IDU)
6. Real estate sector
Include companies that develop or manage real estate, including real estate investment trusts
The most famous companies in the industry
- American Towers Corporation (AMT)
- Simon Real Estate Group (SPG)
- Crown Castle (CCI)
- Equinix (EQIX)
7. Consumer Goods Sector
It includes companies operating in the food and beverage, tobacco, cigarette, household, and personal products sectors.
The most famous companies in the industry
- Walmart (WMT)
- Procter and Gamble (PG)
- The Coca-Cola Company (KO)
- Costco Wholesale Company (cost)
8. Private Consumer Sector
It includes companies in goods and services where consumer demand depends on their finances, such as companies selling expensive products such as cars, luxury goods, or recreational goods, as well as hotel and restaurant stocks.
The most famous companies in the industry
- Nike (NKE)
- Starbucks (SBUX)
- McDonald’s (MCD)
- Disney (DIS)
9. Energy sector
It includes companies engaged in the exploration, production, refining, and sale of energy resources, including oil and natural gas, and companies that serve these industries.
The most famous companies in the industry
- ExxonMobil (XOM)
- tape (CVX)
- Shell PLC (RYDAF)
- TotalEnergies SE (TTE)
10. Industrial sector
They cover a wide range of different businesses that include heavy equipment and transportation, such as airlines, railroads, logistics companies, and companies in the aerospace, defense, construction, and engineering sectors.
The most famous companies in the industry
- Waste Management (WM)
- FedEx (FDX)
- Boeing (BA)
- Union of the Pacific (UNP)
11. Telecommunication Services Sector
Newer segments of GICS include communications service providers, media and entertainment companies, wireless networks, and legacy landline providers, including legacy media such as television, radio, interactive online media, and modern forms of communication.
The most famous companies in the industry
- T-Mobile (TMUS)
- Comcast (CMCSA)
- Netflix (NFLX)
- Profiler platforms (FB)
Nasdaq
It is the Nasdaq Composite Index or the NASDAQ-100 and is denoted by the NAS 100 and sometimes the US 100 on some trading platforms. It is well known to most investors that NASDAQ is the exchange where technology stocks are bought and sold. It also includes some stocks from other sectors such as finance, industry, insurance, transportation, and others.
It is a market value-weighted index of all stocks traded, and unlike the Dow Jones and S&P indices, this index includes some companies that are not based in the United States.
This index includes stocks of large and small companies with market capitalization and therefore depends on the performance of measuring the state of the technology sector, as well as on the state of investors’ risk appetite for speculative stocks.
From this, we conclude that given the breadth of the market for the large companies included in the index, there is a significant advantage to tracking the S&P 500 as a benchmark for market performance, as it can provide an overview of the health of the economic situation. The United States of America.
Components of the index are also updated quarterly and companies must be included in the index provided that they have been traded at least 12 months after their initial public offering (IPO) before being included in the index.
How are stocks traded in the US stock markets?
While e-commerce is currently in place to facilitate the majority of trading, retail traders still play an important role in the stock markets. The method for determining the opening and closing prices on the New York Stock Exchange still depends on the supply and demand factors that occur in the form of a recent auction.
The official market opening time on the New York Stock Exchange is 9:30 AM ET, which is the start of the opening auction, and while orders can be accepted before the market officially opens, MOO and LOO orders are not traded during the auction. To be completed only when the asking price is met
The first data stream for a new trading day usually includes a reference price for each security that matches the previous night’s closing price and also includes data on the present imbalance between buy and sell orders and costs. An opportunity for traders to adjust their trades to match their buy and sell orders.
At the end of the trading day, a closing auction is held, much like the opening auction as the New York Stock Exchange closes at 4 pm ET, with orders appearing that help determines the day’s closing price even before the market opens. Trades can be made as early as 6:30 a.m., as in the opening auction.
In general, the process of setting opening and closing prices is more than just an auction, the auction itself is designed to facilitate trading in a highly complex market. The auction market blends high technology and human interaction to create an efficient arena where things get done.