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NYSE vs NASDAQ: what's the difference?

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. With a combined value of more than $49 trillion, US-based stocks account for around 70% of the global market.

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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.

NYSE vs the NASDAQ: what’s the difference?

Some of the differences between the two exchanges have already been outlined: the NYSE is larger and older while the Nasdaq is best known as the home for emerging and established tech companies. They are also some differences in the way they operate: the Nasdaq is a dealers’ market in which traders buy and sell via a dealer, whereas the NYSE, as an auction market, matches buyers with sellers.

The NYSE also continues to operate 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. With the Nasdaq, however, all trades are conducted electronically and there is no trading floor.

The two exchanges also differ in terms of fees: a company looking to list on the NYSE will need to pay as much as $US500,000, while one looking at the Nasdaq will pay much less – around $US50,000 to $US75,000. This is one reason the Nasdaq has been the more popular option with emerging tech companies trying to keep a lid on costs while the NYSE retains a long list of established businesses. That also helps explain why the Nasdaq has a reputation among traders for being more volatile than the NYSE.

What are the major stock indices?

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:

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) is arguably the most well-known stock index in the US, as well as the second oldest – alongside its sibling the Dow Jones Transportation Average. Both indices were founded by Wall Street Journal founder Charles Dow in 1896 to serve as an indicator for the health of the US economy. Today it includes 30 large, blue-chip stocks – most of them household names like Microsoft, JP Morgan and the Walt Disney Company – though it is no longer confined to industrial businesses. 

S&P 500

The S&P 500 measures the performance of the 500 largest companies (by market value) listed on US exchanges. Unike the DJIA, it is a value-weighted index, meaning the higher a company’s market cap, the greater its weighting. For that reason, many regard it a better barometer of the health of the US economy than the Dow.

Nasdaq Composite

The Nasdaq composite covers the roughly 3300 stocks listed on the Nasdaq stock exchange. Like the S&P 500, it is a value-weighted index though its wide base means it includes many small companies and start-ups. Its performance is seen as measure of not only the health of 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

Although less popular than the Dow or S&P 500, the Wilshire 5000 is the most comprehensive measure of the US market because it includes all publicly traded companies in the US that have readily available price data.

How to trade US markets

The Nasdaq and NYSE give traders access to the world’s largest economy and many of its largest companies. CMC’s platform​ offers ready access to both exchanges, including the thousands of companies and exchange-traded funds listed there.

For more information on how to trade stocks, visit our share trading​ page.

FAQS

Is NYSE and Nasdaq the same?

There are a number of exchanges to trade US stocks , though most trades are carried out through the two major New York-based exchanges: the New York Stock Exchange (NYSE) and the Nasdaq. The NYSE has been the dominant global exchange for more than a century. Around 2,800 companies are currently listed on the exchange. Meanwhile, the Nasdaq has become the go-to exchange for tech firms looking to float their stock.

Is Apple listed on NYSE or Nasdaq?

Apple is listed on the Nasdaq. Founded in 1971, the Nasdaq (which stands for National Association of Securities Dealers Automated Quotations) has become the go-to stock exchange for tech firms. Start trading US stocks today with CMC Markets.

Can you be listed on NYSE and Nasdaq?

Yes, companies can be listed on both the NYSE and the Nasdaq. It is called dual listing. CMC Markets Standard Platform offers ready access to both exchanges, including the thousands of companies and exchange-traded funds listed there.

Is Robinhood NYSE or Nasdaq?

Robinhood is listed on the Nasdaq. Founded in 1971, the Nasdaq (which stands for National Association of Securities Dealers Automated Quotations) has become the go-to stock exchange for tech firms. Start trading US stocks today with CMC Markets.

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