The stock market open is the official start to the trading session where equities are bought and sold in the financial markets. It is at the open that market participants can learn the mood of the broader financial markets, individual stocks or sectors based on opening prices and whether or not the values are trending higher or lower. While the stock market is unpredictable, there are some early indications as to how equities, or stocks, are likely to begin trading each day.
The New York Stock Exchange (NYSE) Euronext and the Nasdaq are two major U.S. exchanges where equity securities are traded. Both exchanges have formal hours, commencing at 9:30 a.m. Eastern time and concluding at 4 pm Eastern tiime. Trading on the NYSE and the Nasdaq is ushered in with the ringing of an opening bell. Generally, the stock market open is characterized by the price of some market index, such as the Dow Jones Industrial Average or Nasdaq Composite.
The stock market open also can trigger different responses from different parties. Investors who are seeking to take profits, or cash in on investments, might see a higher stock market open as an opportunity to sell some or all of a holding. In the event that the stock market opens lower, investors might instead use this as a chance to buy equities at a discount, or a lower price than the shares were previously valued.
There are various factors that might influence the level at which the stock market opens on a given trading session. Factors might include events ranging from internal corporate developments to economic indicators or even conditions overseas. On August 10, 2012, the U.S. stock market broke a multi-session winning streak to open lower as a result of lackluster trade data that was released in China, according to Market Watch.
There are exchanges that facilitate the trading of securities both before and after stock market hours in pre-market and after-hours trading. It is possible to learn the sentiment surrounding an individual security for the stock market open based on the way investors are treating that security in pre-market trading. In March 2012 when technology giant Apple revealed the company would make a quarterly distribution, or dividend payout, from profits, the stock rose 2.4 percent in pre-market trading, according to "Forbes." When the stock market opened later, that positivity continued as the stock extended its gains.
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