The stock market is a place where anyone can buy and sell fractional ownership of a public company. It distributes control of some of the world’s biggest companies among hundreds of millions of individual investors. The buying and selling decisions of those investors determine a company’s value.
The market also helps companies raise money without borrowing by selling shares to the public. A share is a stake in a business, and when you own a large enough percentage of the company, you can vote on issues like choosing members of the board. Generally, you get one vote per share you own (though some companies have different classes of shares with different voting rights).
A stock’s price rises and falls on the market according to supply and demand. Investors looking to buy a certain stock will offer a “bid” (what they’re willing to pay) and sellers will offer an “ask” (what they’re willing to accept). A broker who’s a designated market maker for that security will match up these two sides and facilitate the trade.
There are several stock markets, and they’re broken down into domestic and international stocks. You might hear business reports reference a particular market index, such as the S&P 500 or the Dow Jones Industrial Average. These are the indexes that are used to track the performance of the overall market. You can also invest in ETFs that track a specific sector, or “core” stocks that represent a certain group of companies.