What is the Nasdaq Stock Exchange?

Updated: Oct. 6, 2020, 11 a.m.

The Nasdaq Stock Market, or simply Nasdaq, is the second-largest stock exchange in the world for investors looking to buy and sell shares of stock. Nasdaq was initially an acronym, NASDAQ, which stands for the National Association of Securities Dealers Automated Quotations. It opened on Feb. 8, 1971, providing automated information about stock prices that investors could use to trade stocks on other exchanges. Eventually the Nasdaq became the world's first electronic stock market, taking over trading for many stocks that had previously traded in places other than formal stock exchanges. Now the Nasdaq has formal listing requirements that companies have to meet in order to list their shares on its stock exchange. The Nasdaq has become the largest global exchange to rely solely on electronic trading.

Some investors also use the term the Nasdaq to refer to the Nasdaq Composite Index, an index of the stocks listed on the Nasdaq Stock Market.

Many of the world's largest businesses are among the more than 3,000 companies that list their shares on the Nasdaq. In part because of the way the Nasdaq has embraced technological innovation in its trading platform, the stock exchange has attracted many of the world's leading companies in technology, as well as companies in other cutting-edge industries like biotechnology. These are just a few of the companies trading on the Nasdaq today:

Nasdaq History

The Nasdaq was established to provide an electronic alternative to the prevailing structure of stock exchanges, which involved having live traders on a trading floor to collect and execute orders to buy and sell shares of stock. However, the Nasdaq didn’t initially have investors directly trading any stocks. Instead it used an automated information-gathering process to provide the latest prices for stock trades conducted elsewhere. From there the Nasdaq got more involved in the trading of stocks that weren't listed on the New York Stock Exchange or other established stock exchanges. These stocks, known as over-the-counter stocks, became the Nasdaq's first focus, and some investors still refer to the Nasdaq as an over-the-counter market.

As technology has advanced, the Nasdaq has created automated trading systems that not only match up orders from buyers and sellers but also provide the summary data and reporting required of all stock exchanges. Once the internet came into being, the Nasdaq became the first stock exchange with its own website, and it was the first to allow online trading. The Nasdaq has also embraced cloud computing, using cloud-based solutions to store required regulatory documentation and other data.

More recently there's been a wave of consolidation among exchanges, and in 2008 the Nasdaq Stock Market merged with Scandinavian exchange operator OMX ABO. The resulting company was called Nasdaq OMX Group, and was renamed simply Nasdaq (NASDAQ:NDAQ) in 2015. In addition to continuing to run the Nasdaq, the company also oversees its Nasdaq Nordic markets in Denmark, Sweden, Finland, Iceland, Armenia, and the Baltic States. In addition to stocks, Nasdaq-operated exchanges also enable investors to trade in bonds, commodities, exchange-traded funds, and other more sophisticated investments.

Other Major Exchanges

What are Nasdaq trading hours?

The Nasdaq Stock Market is generally open on weekdays from Monday to Friday, and is closed on Saturday and Sunday. Trading begins when the opening bell rings at 9:30 a.m. Eastern time. The regular session continues for six and a half hours and closes after the closing bell rings at 4 p.m. Eastern time.

However, the Nasdaq also gives traders the chance to participate in special sessions before the regular session begins and after it ends. Premarket trading hours run from 4 a.m. to 9:30 a.m. Eastern time each weekday. After-market hours start at 4 p.m. and run through 8 p.m. Eastern time Monday through Friday.

The Nasdaq closes for a handful of holidays each year, as shown below:

Holiday 2020 Date
New Year's Day Wed., Jan. 1
Martin Luther King Day Mon., Jan. 20
Washington's Birthday Mon., Feb. 17
Good Friday Fri., Apr. 10
Memorial Day Mon., May 25
Independence Day Fri., July 3
Labor Day Mon., Sep. 7
Thanksgiving Day Thurs., Nov. 26
Christmas Day Fri., Dec. 25

Source: Nasdaq Stock Market

The Nasdaq also closes early, at 1 p.m. Eastern time, on the Friday after Thanksgiving, and on Christmas Eve if it falls on a weekday and if the regular Christmas holiday is observed on Dec. 25.

The Nasdaq Stock Market is the second-largest stock exchange in the world, and it plays a vital role in incorporating technology into the trading process. The Nasdaq provides an alternative to the New York Stock Exchange for companies that want to list their stocks on a U.S.-based stock exchange. With a long history of innovation, the Nasdaq should continue to help investors for years to come.

Recent articles

Semiconductor board GettyImages-1141230722

Nasdaq Defies Downturn as AMD Buys Xilinx

The Nasdaq was the only major market to rise on Tuesday.

workers face masks

Dow Jones Doesn't Get Lift From Merck, Caterpillar, and 3M Earnings Beats

The earnings reports coming out of Dow components were positive, but that wasn't enough to overcome pandemic fears.

HOG motorcycle

Harley-Davidson Revs Up on a Mixed Market Day; BP Loses Energy

Earnings had a positive influence on many stocks Tuesday.

Capitol GettyImages-491753396

Did the New Bear Market Just Begin?

A rough start to the week has naysayers calling for more declines.

Coffee GettyImages-968993540

The 3 Most Important Nasdaq Stocks on Monday

As the market sold off, these companies stood out. Find out why.

covid fear and worries

Fear and Uncertainty: S&P 500 Plunging on Pandemic, Economic Woes

A lack of progress in Washington on economic stimulus and a second wave of COVID-19 infections have investors selling.

covid testing

Dow Jones Plunges 700 Points as Cases of Coronavirus Surge; Apple Stock Called a Buy but Still Sinks

A serious winter wave of COVID-19 is looking more and more likely.

Bear angry GettyImages-488666605

Why Is the Stock Market Plunging Monday?

A big drop in major market benchmarks has investors asking questions.

toys getty

Stock Markets Finish Mixed as Mattel Wins, Virgin Galactic Falls

The end to the week fit well with investors' uneasiness.

Upside Down GettyImages-93240110

The Stock Market Phenomenon That's Turned the Nasdaq Upside Down

Its behavior in recent years is unusual among markets.