History of the U.S. stock market and things you may not know

TutorialsJune 7, 2022

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Today, everyone knows that the US stock market is a large market, with the most significant trading volume and market capitalization globally. However, not everyone knows that the US stock market is not the first market to appear globally. The following article learns about the history of the birth and development of the US stock market.

Stock market history

The world stock market in the first days appeared spontaneously and very primitively. Initially, around the 15th century, in Belgium, merchants gathered in cafes to exchange goods. These exchanges are usually undocumented. When they first appeared, exchanges were only small groups, later forming separate markets. By the end of the 15th century, these markets had unified conventions and developed standard rules for all market participants. The market development has increased rapidly in the number of members and the different markets: commodities, currencies, futures, and stocks…

The first stock market began in Amsterdam in 1611. Later, the market expanded to England, France, Germany, Italy, the Nordic countries, and the United States. In 1921, in the US, when this trading market was moved from outdoor to indoor and officially established as the Stock Exchange. In the early days, the stock exchange operated manually by direct transactions, with secretaries receiving orders from customers. Later, thanks to the development of science and technology, the stock exchanges have developed as they are today with the online electronic trading system.

The global stock market has gone through various ups and downs, with significant crises going down in history. However, after that, the stock market was restored and developed.

History of the US stock market

The US stock market is now considered the most developed in terms of quantity and quality. However, historically, it was not until 1792 that the United States entered the stock market with the event that 24 leading New York merchants met and signed the Buttonwood Agreement. These people met every day to trade (buy, sell) stocks and bonds, and then became the basis for establishing the New York Stock Exchange (NYSE) as it is today.

In 1800, the first stock exchange in the United States was born. In 1817, the New York Stock Exchange was founded and renamed the New York Stock Exchange in 1863. In 1971, the National Association of Securities Dealers (NASD) was established and created. Unlike the NYSE, which is just a physical stock exchange, Nasdaq allows stocks traded on a modern online computer network. In addition to the two well-known stock exchanges, the NYSE and the NASDAQ, investors can also buy and sell shares on the American Stock Exchange or exchanges in other areas such as Boston, Philadelphia, and San Francisco.

Initially, securities trading was limited to government bonds, bank stocks, and new insurance companies. After that, the US stock market grew and gradually increased in several shares, shares, and daily trading volume. Experiencing many historical fluctuations, the US stock market has experienced many great crises. As a result of these crises, many companies and banks went bankrupt, and stocks lost value, entire markets fell apart. To overcome those problems, from 1933 to 1940, the US government passed many laws to regulate the stock market, such as the Securities Law and Securities Exchange Law. It established many regulatory agencies related to the management and control of the activities of the Stock Exchanges. Since then, the US stock market has gradually shifted to a state-managed market controlled by the government.

America’s Largest Stock Exchanges

New York Stock Exchange

History of US and world stock markets. Learn about America's Largest Stock Exchanges and Great Recessions in American Stock History
New York Stock Exchange (NYSE)

The New York Stock Exchange (NYSE) is the oldest in the United States. The NYSE is currently the world’s largest stock exchange in terms of market capitalization and second in terms of the number of listed companies. In the early days of its establishment, the New York Stock Exchange listed only five companies. However, today the NYSE has recorded more than 2,600 companies with a total market capitalization of more than 30 trillion US dollars (2018).

NASDAQ Stock Exchange

History of US and world stock markets. Learn about America's Largest Stock Exchanges and Great Recessions in American Stock History
NASDAQ Stock Exchange

NASDAQ is the world’s first electronic stock exchange. The image of a large electronic board listing prices and real-time volatility first appeared on the US stock market on the NASDAQ exchange. Later, the NASDAQ exchange evolved into an automated trading system that allowed people to buy and sell stocks under predetermined conditions automatically. It is also the first stock exchange that allows automatic small-scale order placement (SOES) of 1000 shares or less. The automated trading functions of today’s global stock markets are primarily derived from the NASDAQ.

The Great Recessions in the History of the US Stock Market

History of US and world stock markets. Learn about America's Largest Stock Exchanges and Great Recessions in American Stock History
The scene outside the New York Stock Exchange on the day of the event. (Source: Internet)

The economy in general and the stock market, in particular, are constantly fluctuating daily. However, the US stock market has experienced cycles of greater volatility in the weeks to years. There are four phases for a market cycle: accumulation, bullish, distribution, and bearish. The accumulation phase occurs when the market is low, and buyers start buying the stock at this point to buy the stock at a discount. After the market rallied and stabilized, many investors began jumping in and pushing the stock price. At the end of the stabilization period, investors continuously jump into the market and form a spike. And in the distribution phase, investor sentiment becomes chaotic and enters the downtrend phase.

There are several historical cycles in the US stock market as follows:

  1. During the “Bubble Twenties,” speculators leveraged the stock market, driving up prices and then leading to the stock market crash of 1929. Stock prices in America then took years to recover.
  2. In 1987, “Black Monday” occurred when corporate buybacks and portfolio insurance drove the market up until October 19, 1987. Then the sell-off. and investors panicked in unison, sending the Dow down 23% in just one day.
  3. In the late 1990s, investors flocked to technology stocks as the Internet boom hit. However, not all companies were profitable and developed, causing a bubble to burst in the US stock market until 2002.
  4. From the early 2000s-to 2008, the housing market developed rapidly, and mortgages exploded everywhere, causing the stock market to rise for many years. And then, the market inevitably crashed and caused a deep recession that lasted until March 2009.


Although the US stock market was not the first to appear in the world, it is now becoming the largest and most prestigious in the world. Historically, the US stock market has experienced many ups and downs with great crises that severely affected the US economy. However, in the long term, the US stock market is growing and growing strongly. Today, the US stock market is mature and has many strict regulations from the US government. Therefore, this is a fairly safe long-term investment market and is increasingly loved and interested by many investors around the world.

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