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The US has many big and small stock exchanges that trade billions of dollars’ worth of securities such as equities, commodities, and bonds daily. The prominent ones include the New York Stock Exchange (NYSE), Nasdaq, S&P 500, and the Dow Jones or Dow 30. Each of these exchanges has varied weightage based on their market capitalization.
The New York Stock Exchange, or NYSE, is the world’s largest equities exchange and one of the leading auction markets. Unlike the electronic exchanges, the auction market allows both buyers and sellers to participate physically in the trading process on the in the house. Currently, around 2,400 companies are listed on NYSE with a total market cap of more than USD 21 trillion.
Nasdaq is an electronic exchange where buyers and sellers can participate online or through a telecommunication system. It offers companies and governments to interact with dealers/brokers, buyers, or retail customers in a simplified and faster way to process the buying and selling of different securities.
Nasdaq has around 3,800 companies, or stocks, listed on its platform, with a market cap of over USD 11 trillion. Although it has more companies listed on its platform, it has a smaller market cap because it allows smaller firms to trade on its exchange. It also has the maximum number of technology and health companies listed on its platform, including Apple Inc. Microsoft Inc., and Tesla Inc., etc.
The S&P 500 is another popular electronic index in the US, but it lists only the top 500 companies of the country. Many investors, economists, and other stakeholders monitor it as they consider it to be the most representative of the diverse economic sectors in the country and give a clearer picture of the markets, or the state of the economy. The S&P 500 has a wide variety of technology and financial companies listed on its platform. This index has a market cap of more than USD 30.5 trillion.
The Dow Jones or Dow Jones Industrial Average, or Dow 30, is another popular securities index that lists the top 30 public-owned companies. It is one of the most-watched stock indices in the world and has a market cap of around USD 8.33 trillion. It is also one of the oldest stock indexes.
Besides these indices, the US also has many other trading platforms like the Russel 2000 index, which is a small-cap index, the Boston Stock Exchange, acquired by Nasdaq in 2007, Chicago Mercantile Exchange (CME), International Securities Exchange (ISE), Miami Stock Exchange (MS4X), National Stock Exchange (NSX), and the Philadelphia Stock Exchange (PHLX), among others.
How these exchanges impact the US and global economy
Stock exchanges are vital for the transaction of businesses in an orderly and transparent way. They play a critical role in disseminating information about financial regulations that each company or individual must adhere follow. However, exchanges can have a much broader impact or implication, beyond business or financial literacy, on the economy itself. Since companies listed on the exchange are usually big, their performance is critical to gauge the market health, which eventually impacts the economy. Also, since many big businesses, which represent various sectors of the economy, trade on these platforms, their profitability or loss can affect a country's economic growth. And as such, governments from around the world closely monitor them for any sign of stress.