What is the Stock Market? (NYSE & NASDAQ)

What You’ll Learn

How NYSE and NASDAQ work, and how stock prices are set.

Content

A stock exchange: an electronic marketplace that organizes buyers and sellers of company shares. The US has two main exchanges: NYSE (1792, established) and NASDAQ (1971, tech-focused).

Practical mechanic: AAPL shareholder Ahmad wants to sell. Sarah wants to buy. Neither knows the other. NASDAQ auto-matches them. At a $200 match, the trade settles.

NYSE characteristics:

• 2,400+ listed companies
• Berkshire, JPM, KO, WMT
• Established industries, large-cap
• Hybrid (specialist + electronic)

NASDAQ characteristics:

• 3,500+ listed companies
• Apple, Microsoft, NVDA, GOOGL
• Tech-heavy, growth-focused
• Fully electronic

How is a stock price set? Second by second. Supply and demand: 1,000 buyers + 800 sellers = price rises. 800 buyers + 1,500 sellers = price drops.

Long-term, what moves price? Earnings growth, sector dynamics, macro economy (Fed, inflation), investor sentiment. Short-term: sentiment dominates. Long-term: earnings dominate.

To buy a stock, you need a broker. Common commission-free US brokers: Robinhood, Fidelity, Charles Schwab, E*TRADE, Vanguard, Webull. Account opens in 5-10 minutes.

Quiz

Question 1: What is a stock exchange?

• A) A government agency
• B) An organized marketplace matching buyers and sellers of shares (Correct)
• C) Only for the wealthy
• D) A bank

Question 2: NASDAQ characteristic?

• A) Established industries
• B) Tech-focused, fully electronic (Correct)
• C) Bonds only
• D) Commodities only

Question 3: How is a stock price set?

• A) Fixed by NYSE
• B) Set by the company
• C) Real-time supply and demand (Correct)
• D) Set by the SEC

Question 4: What do you need to buy a stock?

• A) Direct exchange access
• B) A brokerage account (Robinhood, Fidelity, Schwab, etc.) (Correct)
• C) Just a bank account
• D) Nothing

Action

This week, compare 3 commission-free brokers (Robinhood, Fidelity, Schwab). UI, asset coverage, fractional shares, research tools. Open an account at one.