New York is by far the most important financial center in the United States. Wall Street, the large population of New York, and the stock markets are what make New York the central hub in the financial world of the United States.

New York Stock Exchange

The New York Stock Exchange (NYSE) is located at 18 Broad Street, on the corner of Wall Street in New York City, and is considered the second largest stock exchange in the entire world. Approximately 2,800 companies are traded on the NYSE and the majority of the companies that are listed in the Dow Jones Industrial Average are congruently listed on the NYSE. The NYSE was once the largest stock market in the world, but lost its hold on the number one position in 1996 when NASDAQ’s trading volume surpassed that of the NYSE.

History

The beginnings of the NYSE are rooted in the early 1790s when 24 stock brokers signed what is called the Buttonwood Agreement. The Buttonwood Agreement is so named because it was signed outside of 68 Wall Street underneath a buttonwood tree. By 1817, a constitution had been formed and the group renamed itself the New York Stock Exchange Board. The name was shortened to the New York Stock Exchange in 1863 and remains the same to this day. During the first days of World War I (July 1914), the NYSE was historically closed, but reopened in November of that year in order to allow the trading of bonds in an attempt to supplement the United States’ economic war effort.

The Crashes

The Great Depression was caused by the Black Thursday stock market crash of the NYSE on October 24, 1929 which caused many traders to panic and sell their stocks on Black Tuesday October 29, 1929. As a result, measures were put in place to prevent such future collapses from occurring. One such rule that was instituted, the circuit breaker rule, was utilized on October 27, 1997 when the Dow Jones Industrial Average dropped 554.26 points which prompted the invoking of the circuit breaker rule and closed the NYSE for the day.

Rule Change

The Circuit Breaker rule has since been revised. Now the stock market can be closed for one hour following a 10 percent drop in the market, for two hours after a 20 percent drop, and completely shut down after a 30 percent drop. Should the stock market fall during the afternoon hours, the periods of closure are shorter, but a 30 percent drop will always result in a total closing of the NYSE.