How can I invest in US stocks?

When the stock exchanges for US stocks open in New York at 9:30 a.m. on weekdays, investors’ eyes around the globe turn to the start of trading on the world’s largest exchanges.

US Exchanges

These are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). NASDAQ is also referred to as the technology exchange, as it is often preferred due to historically lower requirements and costs.

US stock exchanges set the global pace.

When trading begins in New York at 9:30 a.m. (New York Time), many stock market participants pay attention to the trend being set before the US market closes at 3:30 p.m. (New York time). After all, the markets of the world’s largest economy often set the pace for the direction of stock markets around the world. If, for example, the US stock markets are trending upwards, the signs on the European stock markets are also generally pointing to price gains. The same principle also applies when markets are falling. So, in essence, global stock markets, including the Johannesburg Stock Exchange (JSE), are highly correlated with the US markets.

The three leading indices in the USA

If you want to get an idea of the direction in which the stock market is heading, you can look at the leading indices in Northern America. In contrast to South Africa, where primarily only the JSE Top 40 with the 40 largest listed companies in the country is significant, the US has three important stock market barometers: S&P 500, Nasdaq 100, and Dow Jones 30. The S&P 500 measures the value of the 500 largest companies on the NYSE. It is considered the broadest representative of the entire US stock market. The Nasdaq 100 contains the 100 largest non-financial companies on NASDAQ. These are mainly securities from the technology sector - the most prominent include Alphabet (Google), Apple, Amazon, and Microsoft. But companies from other industries are also included. The Dow Jones 30 comprises 30 of the largest US companies.

The Dow Jones is a price-weighted index. This means that the higher the share price, the greater the weight in the index. In the case of the Nasdaq 100 and S&P 500, the shares are based on the free float market capitalization, which is the market value of all freely tradable shares. The index levels published in the media generally refer to the price index of the two market barometers.

These are the advantages of trading US stocks.

• US stock exchanges NYSE and NASDAQ are the world's most recognized exchanges.
• The US stock market sets the stock market pace worldwide.
• In the US, three leading indices dominate the stock market: S&P 500, Nasdaq 100, and Dow Jones 30.
• American stocks are quoted in US Dollars (USD).