Stocks in the USA

Economy and Politics

Economic Power USA. The country has the largest stock market, the two largest stock exchanges (NYSE and NASDAQ), and the major indices, such as the S&P500 and the Dow Jones Index. The 330 million residents, spread across over 50 states, generated a GDP of 20,933 billion USD in 2020.

The most important technology companies of our time also all come from the United States of America. Apple, Microsoft, Alphabet, Amazon, Meta, and many others have their origins in the USA, as particularly Silicon Valley (California) is considered a major starting point for today's technology.

In addition, the country also boasts world-class companies in other sectors. Major healthcare and pharmaceutical companies such as Johnson & Johnson, Thermo Fisher, and Pfizer are located here. It is also a highly lucrative financial hub for many FinTech companies like PayPal or Block. Additionally, major banks such as JPMorgan Chase, Wells Fargo, and Goldman Sachs are based here.

The country is democratically governed and there are only two parties, the conservative Republicans and the liberal Democrats. The country represents a free market, has a solid legal system, and offers relatively attractive taxes for employees and businesses. Shareholders and start-ups are particularly supported, benefiting many investors.

The largest companies

Oil, beverages and tobacco. Shortly before the Dotcom Bubble, the largest companies were still present in various sectors. General Electric as the world's largest conglomerate. ExxonMobil as the leading oil production company in the United States or Coca Cola with a wide range of beverage products. This variety of sectors would become highly concentrated in the following years.

Technology rebounds after two crises. With the Dotcom Bubble, three tech companies directly reached the top four largest companies in the country. However, this trend was not sustainable until after the financial crisis. In 2009 and 2010, Apple, Microsoft, and IBM made a comeback. In the following years up to the present day, no industry has seen such enormous increases in stock prices as the technology sector.

USA dominate technology. Apple is on the verge of reaching the next milestone today: a three trillion USD market capitalization. Followed by Microsoft, Alphabet, Amazon, Tesla, and Meta. The technology sector consistently impresses with high margins, scalable business models, and strong growth. Each of these companies comes from the United States.

Headquarters of the largest companies

Monopoly cities. You can see on this map where technology companies are based: in the Silicon Valley, south of San Francisco. Major banks such as JPMorgan Chase, Bank of America, and Wells Fargo are all located on the East Coast in New York City, the most important city for finance and securities.

Tax evasion. More and more companies are leaving the US state of California due to high taxes and regulations. Tesla, Palo Alto, and Oracle have already made the move and relocated their headquarters to Austin, Texas.

US indices as a benchmark for stock prices worldwide

Three indices that determine the daily stock market activities. In the United States, there is the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100. All three are comprised of the largest companies in the world, serving as important indicators for many other countries and regions.

Value Index. The Dow Jones Industrial Average is the oldest index and consists of 30 different companies from various sectors. It is therefore comparable to the Dax in Germany. Here, many value stocks are represented, such as 3M, Walmart, or UnitedHealth.

The Top 500 of the USA. The S&P500 was launched by Standard & Poor's and comprises the 500 largest companies in the country based on market capitalization. However, there are certain admission criteria that must be met for a company to be listed in the S&P 500. A high market capitalization alone is not sufficient.

Technology exchange becomes an index. The Nasdaq 100 Index includes the 100 largest non-financial stocks listed on the American Nasdaq exchange. It primarily consists of technology and rapidly growing startups, making this index significantly more volatile than the other two. Show More

Index performance

Technology as a growth driver. In this chart of the past years, it can be clearly seen that the Nasdaq has generated a significant outperformance compared to the Dow Jones or the S&P 500. This is, of course, due to the tremendous performance of companies such as Apple, Microsoft, Alphabet, and many others. But also, many smaller companies working in growth markets such as Cyber Security, Cloud, or Biotech have been able to record decent price gains during this time, which has fueled the Nasdaq.

The US stock market has always been considered the most solid and successful market for investors around the world. Value stocks in healthcare, industry, or consumer sectors have also been able to achieve top returns over the long term.

The largest and most important trading venues

US markets set the tone. In the USA, there are two important stock exchanges: The New York Stock Exchange and the Nasdaq. The NYSE, also known as Wall Street, is the largest securities exchange in the world with a market capitalization of 27.6 trillion USD. It is closely followed by the Nasdaq with 24.5 trillion USD.

This chart clearly shows that the stock exchanges around the world do not even come close to the US stock exchanges (measured by trading volume and market capitalization). Asian stock exchanges occupy the third to sixth positions. Only after that does the London Stock Exchange follow, which was once considered the most important securities exchange in the world.

Trading hours in the USA

Shorter trading hours. The NYSE and Nasdaq both open and close at exactly the same time. In local time (EST), the Opening Bell rings at 9:30am and the Closing Bell at 4pm. Converted to our time in Germany, that means from 3:30pm to 10:00pm.