Stock Market
A network of exchanges where buyers and sellers trade shares of publicly listed companies.
What is Stock Market?
The stock market is a regulated marketplace — encompassing exchanges such as the NYSE and Nasdaq — where shares of publicly traded companies are bought and sold. It serves two primary functions: allowing companies to raise capital by issuing shares to the public (primary market) and providing investors with liquidity to trade existing shares (secondary market). Stock market performance is tracked by indices such as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite. Prices are driven by corporate earnings, macroeconomic conditions, interest rates, and investor sentiment. Historically, the U.S. stock market has returned approximately 10% per year before inflation over long periods.
Example
The S&P 500, which tracks 500 of the largest U.S. publicly traded companies, returned approximately 26% in 2023 after a difficult 2022. Over the 20-year period ending 2023, the index delivered an annualized total return of roughly 9.7%, illustrating how long-term investing in the broad stock market has historically been one of the most reliable wealth-building strategies.