What is the stock market?
The stock market is a market in which shares of publicly held companies are issued and traded. Also known as the equity market.
A key component of a free-market economy, the stock market gives companies access to capital in exchange for giving investors a piece of ownership, and for investors to potentially grow initial investments into larger sums of money if the company is successful. Selling a profitable stock is called a capital gain. Investors might also lose money if the company’s stock price goes down.
Today, stocks and their trades generally exist in electronic form, and trades occur through a stock exchange.
Two major stock exchanges are the NYSE (New York Stock Exchange) and the NASDAQ. The NYSE is based in New York City, and considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. The NASDAQ is a global electronic stock exchange and also provides the benchmark index for US technology stocks. The NASDAQ is the second-largest stock exchange in the world, and also a leader in trading technology.