The stock market is a place where investors buy and sell shares in publicly-traded companies. Investors buy and sell the stocks based on their expectations about how well companies will perform, economic conditions, and other factors. The prices of the stocks change based on demand and supply.
When a company offers its shares for sale, it has the opportunity to raise money called capital that it can use to grow and expand. The company can also offer dividends which are payments of a portion of the profits that it makes to shareholders (the people who own the shares). Investors profit from owning stocks in one of two ways: the stock price increases or they receive regular income from the dividends paid by the companies.
Stock markets began as a way for entrepreneurs to raise money by offering shares in their businesses to investors. The value of the stocks fluctuated as the fortunes of the business rose and fell. Today, investors can invest in companies from around the world through exchange-traded funds (ETFs) and mutual funds which have a diversified portfolio of stocks.
Investors can gain a snapshot of the overall health of the stock market by tracking the performance of indexes like the Dow Jones Industrial Average (DJIA) and the S&P 500. There are also sector-specific indexes which track the stocks of specific industries.