Stocks: markets reference

A share of stock is a unit of ownership in a corporation. When a company incorporates, it divides its ownership into a fixed or expandable number of shares, which can be held by founders, employees, and outside investors. A shareholder's stake is proportional to the number of shares held relative to the total shares outstanding. Common stock typically carries voting rights and a residual claim on earnings after debts and other obligations are met, while preferred stock generally carries a fixed dividend and a priority claim over common stock, usually without voting rights. Shares can be issued, bought back by the company, split into smaller units, or combined through a reverse split, all of which change the number outstanding without changing total company value.

Stocks trade on organised exchanges such as the New York Stock Exchange, Nasdaq, the London Stock Exchange, and their counterparts in Tokyo, Hong Kong and elsewhere, each with its own regular trading session in local time. Most exchanges also offer limited pre-market and after-hours sessions with lower trading volume and wider price gaps between trades. A given exchange is open only on its own business days and closes for national public holidays. Shares in the largest companies are often also traded outside their home exchange through cross-listings or depositary receipts, letting investors elsewhere access them during their own local hours.

Retail investors buy and sell shares through brokerage accounts, usually in relatively small amounts. Institutional investors, including pension funds, mutual funds, insurance companies and sovereign wealth funds, typically account for the largest share of trading volume and often hold positions for extended periods. Market makers and designated liquidity providers continuously quote buy and sell prices to keep markets functioning smoothly. Company insiders, such as executives and board members, hold and sometimes trade shares in their own company, subject to disclosure rules. Index funds and exchange-traded funds buy baskets of stocks to track a benchmark rather than selecting individual companies.

Each listed share trades under a ticker symbol, a short code unique to that stock on its exchange, such as AAPL for Apple on Nasdaq. At any moment, the market shows a bid, the highest price a buyer will pay, and an ask, the lowest price a seller will accept; the difference is the bid-ask spread. The last traded price and daily trading volume are published continuously during the session. Stocks are quoted in the currency of their home exchange, and prices are generally shown to a small number of decimal places or, in some markets, in fractional units of the local currency.

Market capitalisation is the share price multiplied by the number of shares outstanding, used to compare company size. A dividend is a cash or share payment a company distributes to shareholders from its earnings. The price-to-earnings (P/E) ratio divides the share price by earnings per share, a commonly cited valuation reference. Trading volume counts the number of shares changing hands in a period. A bull market describes a sustained period of rising prices across a market, while a bear market describes a sustained period of falling prices. A blue-chip stock generally refers to shares of a large, well-established company.

Share prices can rise or fall based on company-specific news, industry conditions, interest rates and broader economic events, and a company's shares can lose most or all of their value if the business fails. Regulators such as the US Securities and Exchange Commission, the UK Financial Conduct Authority and their counterparts elsewhere require listed companies to disclose financial results and material events on a regular schedule, and prohibit trading on material non-public information. Exchanges publish rules on trading halts, circuit breakers and settlement cycles. This page describes how equity markets are structured; it does not evaluate or recommend any individual stock.