Stock Market History: A Timeline

Here is a timeline of major events in the stock market’s history:

•   Late 1400s: Antwerp, or modern-day Belgium, becomes the center of international trade. Merchants buy goods anticipating that prices will rise in order to net them a profit. Some bond trading also occurs.

•   1611: The first modern stock trading was created in Amsterdam. The Dutch East India Company is the first publicly traded company, and for many years, it is the only company with trading activity on the exchange.

•   Late 1700s: A small group of merchants made the Buttonwood Tree Agreement. The men meet daily to buy and sell stocks and bonds, a practice that eventually comes to form the New York Stock Exchange.

•   1790: The Philadelphia Stock Exchange is formed, helping spur the development of financial sectors in the U.S., and the country’s expansion west.

•   1896: The Dow Jones Industrial Average is created. It initially had 12 components that were mainly industrial companies.

•   1923: The early version of the S&P 500 was created by Henry Barnum Poor’s company, Poor’s Publishing. It begins by tracking 90 stocks in 1926.

•   1929: The U.S. stock market crashes after the decade-long “Roaring 20s,” when speculators made leveraged bets on the stock market, inflating prices.

•   1941: Standard & Poor’s is founded when Poor’s Publishing merges with Standard Statistics.

•   1971: Trading begins on another U.S. stock exchange, the National Association of Securities Dealers Automated Quotations, otherwise known as the NASDAQ.

•   1987: Corporate buyouts and portfolio insurance helped prices in the market run up until Oct. 19, what became known as “Black Monday.”

•   2008: The stock market crashes after the boom and bust of the housing market, along with the proliferation of mortgage-backed securities in the financial sector.

•   2020: The COVID-19 pandemic reaches the U.S. in early 2020, and the stock markets see a large decline and subsequent recovery.

History of the stock market

Stock markets have existed for hundreds of years. This guide covers the development of markets in 1700s Amsterdam to the most recent significant events of modern stock markets.

Stock markets are dynamic and complex financial institutions that play a central role in the global economy. They serve as a platform for buying and selling shares of companies, allowing investors to participate in the growth of public companies. In this timeline, we explore the history of the stock market, identifying when and how key markets were founded along with other significant events.

Early origins of the stock market

Stock-like instruments can be traced back to Ancient Rome, where citizens bought shares in public companies involved in multiple industries, such as construction and shipbuilding.

The concept of stocks further developed in medieval Europe with the emergence of joint-stock companies, enabling individuals to invest in expeditions and trade ventures. Merchants and traders devised multiple vehicles for investment including the sale of shares and partnerships.

The first stock exchange: 1602

The first official stock exchange was the Amsterdam Stock Exchange established in 1602. At first, only shares for the Dutch East India Company could be traded, making it the world’s first public company. Eventually, more companies were added and the exchange introduced important features like listing fees and regular trading hours. This would all lay the groundwork for future stock markets.

New York Stock Exchange formed: 1792

The first iteration of the New York Stock Exchange was founded in 1792 with the signing of the Buttonwood Tree Agreement. This document organized securities trading among 24 different brokers on Wall Street. The daily meeting to buy and sell securities would eventually grow into the New York Stock Exchange (NYSE), now the largest stock exchange in the world.

London Stock Exchange formed: 1801

When the Royal Exchange was first opened in 1571 to facilitate the exchange of commerce and valuable goods, stockbrokers were not allowed inside the building. Instead, these men facilitated securities trades at the nearby Jonathon’s Coffee House because of their rowdy and unruly nature. Stockbrokers were not allowed to conduct business in the Royal Exchange until it was rebuilt in 1669 after being destroyed by the Great Fire of London. In 1773, a more formal exchange was created in Sweeting’s Alley. This became the official location of the London Stock Exchange by 1801.

Hong Kong Stock Exchange formed: 1891

The Hong Kong Stock Exchange was first formed as the Association of Stockbrokers in Hong Kong. It would not become known as the Hong Kong Stock Exchange until 1914. Since then, it’s become one of the largest in the world as the city has also grown in prominence as a popular shipping port and business centre.

Wall Street Crash of 1929

While numerous market panics occurred in the first century of major markets’ existence, the crash of 1929 was the largest to date and is generally regarded as the first full market crash.

A stock market crash is a sudden and unexpected collapse in prices that affects not just a few companies or sectors, but the entire economic market. The crash of 1929 came after a decade of high economic prosperity, which drove prices to unsustainable levels. It was one of the main causes of the Great Depression that lasted until 1941.

NASDAQ formed: 1971

Headquartered in New York City, the NASDAQ is the most active exchange in the United States and the second largest in the world by market capitalisation. It was also the first electronic exchange.

The introduction of electronic trading on the NASDAQ significantly reduced bid-ask spreads, instantly making it a competitor against large exchanges like the NYSE and encouraging other exchanges to go electronic too.

Black Monday: 1987

Black Monday was another severe market crash that saw major US stock markets lose up to 20% of their value. Many economists regard Black Monday as a price correction following a highly inflated market, similar to the crash of 1929 proceeding the roaring twenties.

Other factors, such as a triple witching the Friday before and mass panic leading to a bank run, caused what could have just been a price correction to spiral out of control.

Shanghai Stock Exchange formed: 1990

Stock trading took place in mainland China as early as the 1860s, and several forms of stock exchanges were founded in the following decades. However, all securities exchanges were closed in 1949 after the People’s Republic of China came into power. Stocks and bonds weren’t traded again until the 1980s, and what is the current Shanghai Stock Exchange opened in December of 1990.

Euronext stock exchange formed: 2000

Euronext was formed as a merger of the Amsterdam Stock Exchange, Brussels Stock Exchange and Paris Bourse. It was established to take advantage of the shared European currency. It is now the fourth-largest stock exchange by market capitalisation behind the NYSE, NASDAQ and China’s Shanghai Exchange.

Euronext operates in multiple European Union member countries, making it a significantly complex and highly-traded exchange.

Dot-com bubble: 1999 – 2000

The dot-com bubble occurred after a sharp rise in new technology investments failed to create the level of profit expected of the new companies. The focus of internet-based businesses in the crash is where the name comes from.

Financial crisis: 2008

The financial crisis was another major stock market crash following a remarkable bull market that encouraged speculative investors to develop subprime mortgages – high-risk loans offered to prospective homeowners that resulted in mass defaults by the borrowers. The real estate market had overextended these loans and subsequently collapsed when borrowers were unable to pay them back.

Coronavirus crash: 2020

The rapid spread of the coronavirus effectively shut down industries and majorly disrupted global trade. Selloffs became so severe that several markets shortly suspended trading after falling more than 10% in a single day.