Modern stock markets

Modern stock markets

NASDAQ

The New York Stock Exchange was dominating the world economy for nearly three centuries. But it faced its first legitimate challenger in the 1970s. In 1971, two organizations, the National Association of Securities Dealers and Financial Industry Regulatory Authority, created the NASDAQ stock exchange.

NASDAQ has always been organized differently from traditional stock exchanges.

NASDAQ doesn’t have a physical location, for example. It is held entirely on a network of computers and all trades are performed electronically.

NASDAQ

Electronic trading gave the NASDAQ a few major advantages over the competition. Most importantly, it reduced the bid-ask spread. Over the years, competition between Nasdaq and the NYSE has encouraged both exchanges to innovate and expand. In 2007, for example, the NYSE merged with Euronext to create NYSE Euronext. It was the first transatlantic stock exchange in the world.

Dow Jones Industrial Average

Stock market indices are an important part of modern stock markets. The Dow Jones Industrial Average (DJIA) is arguably the most important index in the world.

The index was one of several indices first created by Wall Street Journal editor Charles Dow. He was also co-founded Dow Jones & Company. The other co-founder was notable investor Edward Jones.

The so-called Dow Averages were first published in 1885. The Dow Jones Industrial Average is made up of 30 large publicly-owned American companies who play a key role in the American economy.

Modern stock markets
Dow Jones Industrial Average

 

The index started as a list of companies involved in heavy industry, which is why it’s called the “Industrial” Average.

Today, many of the companies listed on the index have almost nothing with heavy industry. Companies are added and removed from the index over time to reflect their influence on the U.S. economy.

Currently, on the DJIA include:

American Express
Goldman Sachs
General Electric
DuPont
Coca-Cola
IBM

The DJIA is a list of some of the wealthiest and most powerful companies in America. General Electric is the longest-running company on the index, having last been added in 1907.

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