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What is the stock market?

Updated: Dec 2, 2021

While a stock represents a singular company, the stock market is the collection of all publicly traded companies. This is usually segmented by geography like the United States whose stock market has over 4200 public companies. The stock market is a diverse area where investors can research and invest in broad array of companies ranging from technology companies like Apple to banks or possibly your local grocery store. The stock market is viewed as a leading indicator for the direction of the overall economy. This means that a rise in the stock market is an indication that the economy is projected to grow and a sustained fall in the stock market is an indication the economy is projected to shrink. Investors globally play close attention to how the stock market is performing for both their home country as well as global markets to identify the best areas to invest their money. A subset of the stock market are stock exchanges like the NYSE or Hong Kong Exchange. These exchanges are the marketplaces to actually purchase or sell shares of a company. There can be multiple exchanges for a stock market like in the USA where many technology companies trade on the NASDAQ and other companies trade on the NYSE.

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