The stock market is not a single place. It is a network of exchanges where shares of publicly traded companies are bought and sold. The New York Stock Exchange, Nasdaq, London Stock Exchange, and Tokyo Stock Exchange are the largest. Millions of shares change hands every day, from pension funds buying in bulk to individuals trading on their phones.

Stock prices move for many reasons. A company reports strong earnings, and the price rises. A rival launches a better product, and the price falls. Interest rates rise, making bonds more attractive, and stocks sell off. News about trade wars, elections, or pandemics can move the entire market in minutes. Over the long run, stock prices tend to rise, but the path is never smooth.

Stock markets serve two main functions. They let companies raise capital by selling shares. And they let investors convert their holdings into cash quickly. The secondary market, where existing shares trade, does not give companies new money, but it provides liquidity that makes the primary market possible. Without the ability to sell, few would buy in the first place.

Market basics

• Exchanges: NYSE, Nasdaq, LSE, TSE
• Indexes: Dow Jones, S&P 500, Nikkei
• Bull market: prices rising
• Bear market: prices falling
• Volatility: magnitude of price swings