Congrats on the arbitrary milestone... One of America's 3 big stock indexes, the Nasdaq, just hit the round number of 9,000 points. The Dow Jones Industrial Average and S&P 500 both aim to represent a broad industry range of US stocks — but Nasdaq is more of a tech index. And it's unique:
- Nasdaq is both an index and a stock exchange, rivalling the New York Stock Exchange).
- It reflects the performance of 3,000 mostly tech, growth-focused stocks.
- So we wrote a whole article for you defining Nasdaq here.
The times, they are a-changing... The NYSE was founded way back in 1792, when brokers got together under a tree on Wall Street. The Nasdaq exchange was founded in 1971, claiming to be more efficient than NYSE because it used computers to trade, not huge dudes who had retired from college football/lacrosse.
- The Nasdaq OGs: Microsoft, Apple, Amazon, and even Starbucks chose Nasdaq to prove that computers at Nasdaq's human-less trading floor can execute stock transactions.
- The NYSE Blue Chips: Exxon Mobil, General Electric, Ford, and JP Morgan Chase proudly visit their home trading floor on Wall Street where pieces of paper (representing stock orders) used to be exchanged by hand.
There's hardly any difference between NYSE & Nasdaq anymore... Both exchanges give the same key benefits: Companies can sell stock to public investors, then public investors can buy that stock. That's why some tech companies list on the NYSE (like Uber) and some non-tech companies go Nasdaq (Lululemon surged 91% on Nasdaq this year). Here are today's main differences:
- Nasdaq charges companies lower fees to list their stock.
- NYSE brings the nostalgia of old (picture ringing that iconic ringing bell).
- NYSE is an auction market, like eBay for stocks: you do business directly with the person who's selling to you, and the highest bidder wins.
- Nasdaq is a dealer's market, like an Expedia for stocks: middlemen facilitate your transaction through an electronic network with millions of prices posted.