Learn what the stock market is, how primary and secondary markets differ, and why equity trading matters to the wider economy.
The stock market is the system through which company shares are issued, bought, and sold. It includes both the primary market, where companies raise capital, and the secondary market, where investors trade shares with one another.
When a company sells shares to raise money, it is using the stock market as a capital-formation channel. Once the shares are outstanding, exchanges and related trading venues provide liquidity and price discovery. Those secondary prices influence cost of capital, executive incentives, wealth effects, and how investors compare businesses across sectors.
This matters because the stock market links household savings, institutional capital, and corporate financing. It is not only a trading arena; it is also a valuation mechanism that affects investment, governance, mergers, and confidence in the broader economy.