The stock market, explained in 3 minutes

The stock market consists of a set of exchanges and other venues where shares of public companies are bought and sold. The Nasdaq and the New York Stock Exchange are two of the most well-known exchanges in the US, while major exchanges also operate around the world, including in Tokyo, Shanghai, London, and São Paulo.

Visualize the differences between the New York Stock Exchange and the Nasdaq.

Why does the stock market matter?

Open any newspaper, turn on your local TV news station, or listen to a daily business radio segment, and you’re bound to hear about how the stock market is performing. Netflix created a 17-minute (free) explainer that dives deep into the nitty-gritty of how we got here.

A history of stock exchanges, from Venitain merchants to modern day

While the idea of stock exchanges—markets where securities can be bought and sold—is mostly synonymous with Wall Street, the New York Stock Exchange, and other modern markets, places to buy and sell financial instruments have a long history....

What's the difference between a stock and a share?

While the words "stock" and "share" are often used interchangeably in casual conversation, they have different meanings. For instance, "stock" is more general, whereas "share" is more precise.

Shares are parts of a stock that represent ownership of a company

Shares are traded on the stock market. Once you buy a single share of a company, you are considered a shareholder of that company and may have certain rights as a partial owner, such as voting on business decisions.

The Nasdaq is typically the world's second-largest stock exchange when measured by the total market value of the companies listed on the exchange.

Find out how companies decide which stock exchange to list on

Tech companies often prefer to list on the tech-focused Nasdaq, whereas more traditional organizations opt for the New York Stock Exchange. Sometimes the choice is made partly based on the services an exchange offers a company.

A stock index is a group of companies clustered together, often providing a condensed snapshot of a market segment.

What’s up with the new Texas Stock Exchange?

The two biggest stock exchanges in the U.S. are both based in New York—the New York Stock Exchange and the Nasdaq. But a potential new “Texas Stock Exchange”—which would be based in, you guessed it, Texas—could change that. To find out more about the project, backed by enormous companies such as BlackRock and Citadel, watch this video.

The Nasdaq Composite index includes all of the companies traded on the exchange

This 3,000+ company index stands in contrast to the Nasdaq 100, which only includes 100 of the most influential non-financial companies traded on the exchange. These are the two most commonly used indices for Nasdaq investments.

A stock market timeline

The stock market has come a long way since the 1600s, when the first version of a stock exchange was created in Amsterdam. Mile markers along the way include everything from the Dow Jones Industrial Average's creation in 1896 to the stock market woes during the COVID-19 pandemic in 2020.

Investors rely on the S&P 500 as a benchmark for the state of the economy

Since the index represents a broad range of diverse industries, it's become a proxy for the market itself and a common benchmark for investors to compare returns and performance patterns against. Generally speaking, when someone says a stock is under- or out-performing the market, that actually means under- or out-performing the S&P 500. The S&P 500 is exchange-agnostic, and includes companies listed on both the NYSE and Nasdaq.

Companies sometimes change which stock exchange they're listed on.

The Nasdaq's 'Magnificent 7' have an outsized impact on the Nasdaq 100's performance

These seven companies are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. They're often responsible for over 40% of the Nasdaq 100 index's gains, but the exact percentage varies from year to year.

The origin and history of stock exchanges

When were stocks first sold? Though debt was first sold in Venice in the 14th century, stocks proper began in the Netherlands. To fund its spice trade across the world in 1602, the Dutch East India Company sold stocks to individual investors, a novel approach to raising funds. It was the Dutch West India Company that founded New York—the site of some of the world’s greatest stock exchanges. Listen to a concise historical overview here.

The difference between stocks and bonds

While more people invest in stocks than bonds, experts say owning both can make for a healthier portfolio. Stocks are considered a riskier investment than bonds, but tend to have higher returns. While bonds might be the safer option, they won’t grow your wealth as quickly.

The first US stock exchange dates back to the 1790s in Philadelphia

Only two years after that stock exchange in Philadelphia started, the largest stock exchange in the US to date was created: the New York Stock Exchange.

40 key stock market terms, explained

Liquidity. Forex. Capitalization. Blue chip stocks. These are just a few pieces of stock market vocabulary most people who don't spend all day on a trading floor might not know. Thankfully, we found a fun infographic that makes it easier to learn what 40 key stock market terms mean and why each of them matters.

Millions of Americans will be invested in SpaceX because of the fast-tracked process to list SpaceX on the Nasdaq 100, and, subsequently, the index funds that track it.

The NYSE is one of the few remaining stock exchanges where much active trading still happens in person on the trading floor.

Companies often use different share classes, like Class A or Class B, to structure ownership

Share classes refer to specific types of company stock that are distinguished by the rights they grant, such as voting power and dividend access.

What is after-hours trading?

While both the New York Stock Exchange and the Nasdaq open at 9:30 am ET and close at 4 pm ET, some trading is allowed after that. After-hours trading was once only open to institutional investors and people with particularly high net worths. Now, with the advent of computers, anyone can trade stocks anywhere online, and those regulations have broadened.

The wealthiest Americans own the vast majority of the stock market

Recent data from the Federal Reserve shows that the richest people in America own 93% of all the country's stock—the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks.

The Nasdaq was founded in 1971, marking the debut of electronic trading

The Nasdaq stock exchange arguably invented electronic trading, making it a key part of fintech history. It's often used as a benchmark for how the tech industry is performing.

See the world’s largest stock markets in 1900 versus 2023

The US is now home to the world's largest stock market, but that wasn't always the case. This data visualization shows where the largest stock markets in the world were in 1900, then compares that map to the current geographical distribution of stock markets today, based on each country’s percentage share of global market capitalization. See what it looks like by clicking here.

Prediction markets and sports betting are not forms of investing, despite how some fans portray them.

Mutual funds invest in multiple different companies with money from many investors, while an individual stock invests in one company with funds from a single investor.

Retail investors are average joes, while institutional investors often move billions of dollars a day

Retail investors often trade 100 shares at a time, while institutional investors trade 10,000 or more. The biggest difference is that, unlike retail investors, institutional investors are professionals who are trading someone else’s money.

The S&P 500, managed by the same company, is another major stock index

Also run by S&P Dow Jones Indices, the S&P 500 tracks 500 large US firms using market-value weighting. Many analysts view it as a more accurate gauge of the American economy.

The Nasdaq 100 index tracks the exchange's 100 largest non-financial companies

This index was created in 1985, over a decade after the Nasdaq first launched. The companies on the index must meet certain criteria, including having a minimum average daily trading value of $5M.

Retail investing by the numbers

When average Americans began pouring into the stock market, Wall Street wasn’t sure if its new guests were there to stay. But at the end of 2023, Public confidently declared that retail investors “weren’t going anywhere” after 30 million new individuals began buying and selling stock. Download the report to learn more here.

When the New York Stock Exchange was started in 1792, traders would meet both outside on the street and in coffee shops to do business.

ETFs and mutual funds both pool money into a basket of investments—but the key difference between them is that mutual funds trade just once per day after the market closes, while ETFs trade like stocks throughout the day at fluctuating prices.

Stock options give investors the right to buy or sell a stock at an agreed-upon price and date

There are two types of options: calls, which are bets that a stock will rise (or not rise past a certain point), and puts, bets that a stock will fall (or not fall past a specific level). While stock options give investors the right to do these trades, they do not obligate buyers to follow through with them—sellers, on the other hand, must perform the option if it is exercised

Ride along on one coffee company's journey through the stock market to better understand how a company goes from private to public.

See a real-time list of the most shorted stocks in the US

Every two weeks, the Nasdaq and New York Stock Exchange release the stocks with the most short positions. Some of the companies with the highest short positions as of early 2026 were Hims & Hers and Groupon.

See a map of the world's 25 largest stock exchanges, which had a total market cap of $106T as of 2023.

Retail investors are individuals who trade stock for themselves

Institutional investors, on the other hand, are investing for someone else. There are big differences between the two, one being that institutional investors can be granted certain special treatment (like being able to purchase IPOs right away).