What Is the Stock Market?

Companies, shares and owners

A company can divide its ownership into units called shares. When a company is publicly listed, anyone can buy those shares, which makes the buyer a part-owner entitled to a proportional claim on the business.

The 'stock market' is not a building. It is the collection of exchanges, brokers and market participants that connects buyers and sellers of those shares.

Exchanges

The New York Stock Exchange and Nasdaq are the two large U.S. exchanges. Conceptually they do the same job: provide a regulated venue where orders to buy and sell can meet, with rules about disclosure, trading hours and fair access.

Why prices move

A share price is simply the price at which the most recent buyer and seller agreed. It moves when the balance of buyers and sellers changes — because of company results, expectations about the future, interest rates, sentiment, or forced buying and selling.

Short-term price movement is mostly changing opinion. Long-term price movement follows the underlying business far more closely.

Who is actually trading

Individual investors are a minority of daily trading volume. Pension funds, mutual funds, market makers and institutional traders make up much of the activity behind any given day's price move.

This matters because a large daily swing often reflects institutional flows or automated trading, not new information about a company's long-term prospects.