Take a look at the world’s largest listed companies: Amazon, Berkshire Hathaway, JP Morgan Chase, Microsoft. They all rank among the largest companies in the world, and they are all listed in the US across its two major stock exchanges, the NYSE and Nasdaq. With a combined value of more than $49 trillion, US-based stocks account for around 70% of the global market.
Understanding the NYSE vs Nasdaq can help traders navigate the US stock market. In this guide, we break down their key differences, how each exchange works and how to get started trading the US stock market with CMC Markets Australia.
Key takeaways
The NYSE and Nasdaq are the two major US stock exchanges, giving traders access to thousands of listed companies.
The NYSE is larger and older, while the Nasdaq is known for its concentration of emerging and established technology companies.
The NYSE and Nasdaq differ in how they operate, including their market structure, trading floors, listing fees and volatility.
Major US stock indices include the Dow Jones Industrial Average, S&P 500, Nasdaq Composite and Wilshire 5000, which track different segments of the US stock market.
Australian traders can access NYSE- and Nasdaq-listed shares through CFDs with CMC Markets, taking a position on their price movements without owning the underlying asset.
What are the major US stock markets?
Although it’s common to hear people talk about “the stock market” or Wall Street as though it is a single entity, there are actually a number of exchanges in the US, though most trades are carried out through the two major New York-based exchanges:
New York Stock Exchange (NYSE)
With a history dating back to 1792, the NYSE has been the dominant global exchange for more than a century. Around 2,800 companies are currently listed on the exchange with a total market value of nearly $US26 trillion or around 37% of the world’s total stock market capitalisation.
Nasdaq
Founded in 1971, the Nasdaq (which stands for National Association of Securities Dealers Automated Quotations) stock exchange has become the go-to location for tech firms looking to float their stock. Many of the world’s most valuable companies, including Apple, Microsoft, Facebook and Amazon are listed here, giving it a total market capitalisation of $19 trillion and making it the second largest exchange in the world.
Other, smaller exchanges include:
NYSE American: The NYSE American is a subsidiary of the NYSE and was previously known as the American Stock Exchange. It specialises in small cap stocks and exchange-traded funds.
NYSE Arca: This was originally known as the Archipelago exchange and was taken over by the NYSE in 2005. It is the world’s largest ETF exchange.
Nasdaq BX: Originally known as the Boston Stock Exchange prior to its takeover in 2007.
Nasdaq PMX: This was previously known as the Philadelphia Stock Exchange, which was founded in 1790 – two years before the NYSE.
There are also several other exchanges like the Chicago Mercantile Exchange, which focus on other forms of investments, such as commodity futures and bonds.
What are the differences between the NYSE and Nasdaq?
Characteristic | NYSE | Nasdaq |
Size and history | Larger and older than the Nasdaq | Known as the home for emerging and established tech companies |
Market type | Dealers’ market - traders buy and sell via a dealer | Auction market - matches buyers with sellers |
Trading floor | Operates a physical trading floor where trades are made through a visually chaotic system of verbal and physical gestures known as open outcry, though most of the trading volume is now conducted electronically at its data centre in New Jersey. | All trades are conducted electronically, and there is no trading floor. |
Listing fees | A company looking to list on the NYSE will need to pay as much as $US500,000 | A company looking to list on the Nasdaq will pay much less - around $US50,000 to $US75,000 |
Companies listed | Established businesses | Popular option among emerging tech companies trying to keep a lid on costs |
Volatility | Has a reputation for being less volatile than the Nasdaq | Has a reputation among traders for being more volatile than the NYSE |
What are the major stock indices covering the NYSE and Nasdaq?
The companies listed on the Nasdaq and NYSE are covered by a large number of stock indices. These track the performance of particular companies and sectors, or the market as a whole and are used as benchmarks for investors and traders. And while there are more than 5,000 indices covering the US market, only a few are widely followed, they include:
Index | Companies covered | Key features |
Dow Jones Industrial Average (DJIA) | 30 large, blue-chip stocks, including household names like Microsoft, JP Morgan and the Walt Disney Company. | Arguably the most well-known stock index in the US, as well as the second oldest. Founded by Wall Street Journal founder Charles Dow in 1896 to serve as an indicator for the health of the US economy. |
S&P 500 | 500 of the largest companies (by market value) listed on US exchanges. | A value-weighted index, meaning the higher a company’s market cap, the greater its weighting. For that reason, many regard it as a better barometer of the health of the US economy than the Dow. |
Nasdaq Composite | Roughly 3,300 stocks listed on the Nasdaq stock exchange, including many small companies and start-ups. | Like the S&P 500, it is a value-weighted index. Its performance is seen as a measure of not only the health of the tech sector but of market demand for speculative stocks. Traders who wish to only track the performance of the major Nasdaq stocks can follow the Nasdaq 100, which includes the top 100 stocks. |
Wilshire 5000 | All publicly traded companies in the US that have readily available price data. | Although less popular than the Dow or S&P 500, the Wilshire 5000 is the most comprehensive measure of the US market. |
How to trade the NYSE and Nasdaq with CMC Markets Australia
The Nasdaq and NYSE give traders access to the world’s largest economy and many of its largest companies. CMC's CFD platform offers ready access to both exchanges, including the thousands of companies and exchange-traded funds listed there.
Getting started is simple - open a CMC Markets trading account or try a demo account, select the US share or ETF you want to trade and take a position on its price movement.