The history of NASDAQ & Dow Jones

The NASDAQ


The NASDAQ (National Association of Securities Dealers Automated Quotations) is a stock exchange that was founded in 1971 to become the world's first electronic, screen-based stock market. The exchange model provided a revolutionary platform for the execution and settlement of stock transactions, representing a major step forward in the improvement of market liquidity, transparency, and market efficiency.

Prior to 1971, stock traders relied on the “price-time” system, which meant that orders were executed based on a combination of price and order time. This system was inefficient and produced results that were often disadvantaged to one party or the other. The creation of the NASDAQ changed the game by introducing an automated system that allowed orders to be processed based on price only. 

The launch of the NASDAQ was met with strong demand, and by the end of 1975, the exchange’s market capitalization had reached 3.2 billion dollars. The exchange launch also coincided with a marked increase in the number of public offerings, as more and more businesses sought to tap into the visibility and liquidity of the NASDAQ.

In April of 1993, the exchange was officially recognized as a national exchange, and the technology utilized by the NASDAQ continued to be improved – particularly after the rise of the internet in the 1990s. In addition, new trading platforms such as ECNs (Electronic Communication Networks) allowed for the rapid growth of the markets and a much deeper level of liquidity. 

Since its launch in 1971, the NASDAQ has become an incredibly influential global exchange. It is now the second largest exchange in the US, with over 2,800 companies listed on its markets.

The DOW JONES


The Dow Jones Industrial Average (DJIA), or simply the Dow, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. It is the second oldest U.S. market index after the Dow Jones Transportation Average, which was also created by Dow Jones & Company co-founder and Wall Street Journal editor Charles Dow.

The average is named after Dow and one of his business associates, statistician Edward Jones. It was invented by Charles Dow in 1896 as a way to measure the industrial strength of the collection of companies he was tracking in the stock market. The index was originally compiled as a 12-stock index that included industrial stocks. 

Over the years, the Dow has expanded to include all types of stocks, from technology companies to financial firms, and it is now considered one of the most accurate gauges for the U.S. stock market. The Dow, which is price-weighted, is calculated by adding the prices of the 30 component stocks and then dividing by a number that has been adjusted over the years to account for stock splits and other corporate actions.

The Dow Jones Industrial Average has come to be seen as a key indicator of the overall performance of the stock market. It is the most widely followed index and is often used as a barometer of the economy. As such, it is often reported in news programs, newspapers, magazines, and financial websites.

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