Introduction to the U.S. Stock Market
Over the past decade, the crypto market has established an entirely new trading system. From centralized exchanges to on-chain DEXs, from automated market makers to on-chain order books, investors have become accustomed to trading digital assets. However, when they first encounter the stock market, many discover that while U.S. stocks have a much longer history, their core logic is actually not that complex.
Simply put, the U.S. stock market is a capital market connecting companies and investors. Companies raise funds by going public, while investors share in the future growth and profits of these companies by buying their stocks. In this process, exchanges play a crucial role by providing a public, transparent, and highly liquid trading environment for global investors.
Primary Market: How Do Companies Enter the Stock Market?
A company's stock doesn't naturally exist in the market. Typically, a company must first go through an Initial Public Offering, or IPO, to formally enter the stock market.
The essence of an IPO is that a company sells some of its shares to the public to raise capital from investors for business expansion, technology development, or strategic investments. After going public, shares previously held by founders and early investors become available for trading by a wider range of investors.
This stage is called the primary market—the market where companies directly issue shares to investors.
For most retail investors, participating in the primary market usually requires a high threshold, so the vast majority engage with the secondary market, which is where stocks are traded after they are officially listed.
Secondary Market: Trading Stocks Between Investors
After a company completes its IPO, its shares enter the secondary market for trading. Here, investors can freely buy and sell shares among themselves. If someone believes a company will continue to grow, they may buy at the current price; if someone thinks the price is high or wants to cash out profits, they can choose to sell.
Stock prices are not determined by exchanges but are formed by buyers and sellers in the market. When more investors are optimistic about an AI company, increased buying demand may drive up its share price; when market expectations decline, increased selling may cause prices to adjust.
This price discovery mechanism is very similar to the trading logic in the crypto market. Whether it's Bitcoin or a publicly listed company's stock, prices are ultimately shaped by the collective trading actions of market participants.
What Are the Main U.S. Stock Exchanges?
When it comes to U.S. stocks, many investors hear two names: NYSE and Nasdaq. NYSE, or the New York Stock Exchange, is one of the world's oldest and largest stock exchanges. Many industry-leading companies in finance, industrials, and consumer sectors choose to list here.
Nasdaq is known more for its technology companies. Over recent decades, many innovative tech firms have chosen Nasdaq for their listings, including familiar tech giants and AI companies. Although the two exchanges differ in listing standards and market positioning, for most investors there is no fundamental difference in how stocks are bought or sold regardless of where they are listed.
Investors usually care more about a company's competitiveness, industry prospects, and future growth potential.
Why Do Stock Prices Keep Changing?
Many crypto investors entering the stock market for the first time notice that stock prices don't always rise. In fact, stock prices are influenced by many factors every day.
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The company's own performance: For example, if a company's financial report shows revenue and profit exceeding expectations, its share price may rise; conversely, disappointing results may trigger negative market reactions.
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Macro-economic environment: Changes in Federal Reserve interest rates, inflation levels, employment data, and global economic growth can all influence investor outlooks on the future of the market.
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Market sentiment also impacts price volatility: The emergence of new technology, industry policy changes, or major international events can shift investor expectations and affect stock prices.
However, over the long term, a company's operational ability and profitability remain key determinants of stock value.
Why Does the U.S. Stock Market Attract Global Investors?
As the world's largest stock market, U.S. stocks have long attracted capital from around the globe.
One reason is that it brings together many of the world's leading companies. From consumer electronics to artificial intelligence, from cloud computing to medical innovation, many enterprises that change the world are born in the U.S. stock market.
Additionally, U.S. stocks have a mature information disclosure system. Listed companies must regularly publish financial data and operational updates, enabling investors to make decisions based on public information rather than relying on rumors.
At the same time, the U.S. market offers strong liquidity. A wide range of institutional investors, funds, and individuals actively participate in trading, making buying and selling stocks more dynamic and providing abundant investment opportunities.
For those seeking long-term investments, U.S. stocks are not just a trading venue—they're an important window into global economic and technological trends.
Summary
The essence of the U.S. stock market is that it's a platform connecting companies and investors through value. Companies obtain funding for growth by going public; investors share in that growth by holding shares.
From primary to secondary markets, from exchanges to price formation mechanisms, U.S. stocks feature a mature structure and comprehensive trading system. While prices may be influenced by various factors in the short term, over time company value remains the fundamental basis of the stock market.
In the next lesson, we'll discuss an even more essential question: When you buy a stock, what exactly are you buying? Why does a stock have value? And how do investors earn returns from owning stocks?
