US stock market timings
It is now a small world that we live in. People get from one place to another in perhaps the smallest amount of time than they ever had in the history of mankind. But the bigger transformation has been in the finance world.
Money can now move from one part of the world to another. This has resulted in all financial markets being connected to each other. Large asset management companies and investors take positions in different parts of the world with a click of a button.
It is this nature of money that is both a boon and bane. If one market is doing well, the general assumption is that others will too. But if one market falls, so does the other. The domino effect is nowhere better demonstrated than in the financial market where a crash in one market impacts all others, thanks to the common thread called money.
The United States of America is the powerhouse when it comes to money. What happens in the US sends vibrations across the world. Thus it becomes imperative to track how the US market is performing. Since the US is a huge country and operates in different time zones, we in India need to have an understanding of when it operates. It helps to know the US stock market timings in order to get a feel of how Indian markets are likely to open.
The country has several stock exchanges expanding across the state, however, the two major ones are the New York Stock Exchange (NYSE) and NASDAQ. Since both the major exchanges are in New York, US stock market timings for all practical purpose is considered to be that of New York.
The New York Stock Exchange is both the United State’s as well as the world’s largest stock market on the basis of market capitalization. It was founded in 1792 and is based in New York’s Wall Street.
This is the second-largest stock market in the world based on market capitalization was formed in 1971. It is owned by Nasdaq Inc. and is based in the Liberty Plaza, New York City.
US Stock Market timing for 2021
Normal trading hours
Both stock exchanges follow the same timings i.e. 9:30 am to 4:00 pm (7:00 pm to 1:30 am IST), during these hours shares are bought and sold. The US stock exchanges are based on eastern time (ET), this has 2 variables:
Eastern Standard Time or EST: this time interval is followed during the autumn and winter seasons in the US, it is 5 hours behind Greenwich Mean Time (GMT).
Eastern Daylight Time or EDT: this is followed during the spring and summer seasons, it is 4 hours behind Greenwich Mean Time (GMT).
Both stock markets function on weekdays only.
Pre-market trading hours:
This period extends from 4:00 am to 9:30 am (ET) and is conducted before the normal trading hours. The US stock exchange was primarily based for the people in the US, but it has now become a global hub where traders from around the world invest. To accommodate this global involvement pre-market and post-market hours have been introduced.
Also, many investors in the US like to trade before the market opens in order to set themselves in a position before the trading operations begin. Suppose a particular government policy is announced which is detrimental to the price of the securities, a pre-market opens an avenue to the trader where he can adjust his position prior to the effect materializing in the stock market. The most traffic experienced in the pre-market is between 8:00 am to 9:00 am.
After-market trading hours:
Aftermarket trading hours occur after 4 pm and can extend up to 8 pm (ET). This was introduced in June 1991 as a result of increased competition from London and Japanese stock exchanges which were providing more trading hours to the investors.
This additional period provides a valuable barometer to the after-effects that the price of a stock after the closing of the normal trading hours. This avenue can be used when news is broken after the normal trading hours, as a result of this the price may experience a spike in any direction, and it may normalize prior to the beginning of the normal session.
A major problem with both these trading periods is a lack of volatility and illiquidity, which may discourage the investors to participate.
The US stock exchange is functional on weekdays except on a certain number of holidays such as New Year’s Day, 20th January (Martin Luther King, Jr. Day), President’s day on 17th February. Good Friday, Memorial Day, Labor Day, Independence day(4th of July) are other auspicious days that are celebrated across the country and the market is also nonfunctional on such days.
During Thanksgiving and Christmas eve the market is functional for a limited time between 9:30 am to 1:00 pm, Christmas day being a holiday.
Having knowledge of US stock market timings helps a trader prepare better for the day ahead.