Basics of U.S stock markets :
To understand easily, let’s compare the U.S stock market with the Indian stock market.
- In India we have BSE ( Bombay stock exchange ) and NSE ( National stock exchange ). Likewise, in U.S the major stock exchanges are NYSE ( New York stock exchange) and NASDAQ ( National association of securities dealers automated quotations ).
- Timings: U.S stock markets are Open from 9:30 AM to 4:00 PM.
- Major indices: Major stock market indices in India are SENSEX and NIFTY. Major indices in U.S are DOW JONES, NASDAQ, S & P 500, and RUSSELL 2000 ( Russell 2000 is one of the upcoming index, Which Focuses On Small Caps ).
- Circuit Filters: In India if market crashes by 10% there is a halt ( Market is stoped for some time ), at 15% another halt, and if market crashes by 20%, market is closed for the entire day. In U.S the levels are 7%, 13%, and 20%.
Important Point :
In indian stock markets we are not allowed to buy in fractional shares, which means we need to buy minimum one share. But in U.S stock markets fractional investment in shares is allowed.
For example, if we have only 50Rs or dollars, but the share price is 100, in India we can’t buy the share. But in U.S we can buy 1/2 ( Half ) of the share.
Differences between NYSE and NASDAQ :
NYSE is one of the oldest stock exchanges in the world, was founded in 1792.
NASDAQ was founded in 1971, it is the world’s first and the largest electronically traded stock exchange.
Market capitalization:
The market capitalization of the NYSE is 26 trillion dollars And the market capitalization of the NASDAQ Is 20 trillion dollars.
As of 2020, NASDAQ has 3300 companies that are listed, and in NASDAQ more of the technology-based companies are listed.
NYSE has more than 2800 companies that are listed, and in NYSE more of the bluechip traditional companies and industrial companies are listed.
In NYSE the stock biggies are:
Berkshire Hathaway, Alibaba Group, Johnson & Johnson, JPMorgan Chase & Co, Bank of America Corp, Walmart Store, Visa Inc, Procter & Gamble Co.
In NASDAQ the stock biggies are:
Apple, Amazon, Microsoft, Alphabet ( Google), Tesla, Facebook, Nvidia, Pay-pal, Netflix, Intel, zoom, Adobe.
U.S stock market indices :
U.S has three major stock market indices, which are DOW JONES, NASDAQ, and S & P 500 ( Standards And Poor’s).
Dow Jones :
It tracks the top 30 blue-chip companies which are listed on NYSE, as well as in NASDAQ.
DOW JONES is a price-weighted index.
Stocks that have higher prices will be given more weightage, stocks with lower prices will be given a comparatively lower weightage.
NASDAQ:
It represents an index of more than 2500 plus companies, which are listed on NASDAQ and may or may not be headquartered in the U.S. In India, we track only those companies which are headquartered in India. NASDAQ is the name of that index as well as the stock exchange.
NASDAQ is a market capitalization weightage index, which means NASDAQ gives more importance to companies that have higher market capitalization.
The S & P 500:
S & P 500 tracks the 500 largest U.S publicly trading companies, which are listed on either NYSE or NASDAQ. These companies have to be headquartered in the U.S and This index is also a market capitalization-weighted index like NASDAQ.
It will give more importance to the companies with higher market capitalization, rather than the price of stocks.
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