Both the NASDAQ and New York Stock Exchange (NYSE) are the 2 main stock exchanges in the US, but they have a lot of differences. The NASDAQ is where you’ll find a lot of technology giants listed. The NYSE is the oldest US exchange and still has a physical trading floor on Wall Street in New York City, while the NASDAQ is an electronic trading marketplace. Here we explain the differences between the 2 exchanges in terms of size, value, diversification and performance.
What’s the difference between the NASDAQ and the NYSE?
These are different stock exchanges, so they have separate stocks listed with them. Most trading platforms that offer 1 of the 2 exchanges also offer the other.
The NYSE and NASDAQ operate differently: the NASDAQ is completely electronic, while the NYSE has a physical “trading floor” on Wall Street. The NYSE is an auction market and the NASDAQ is a dealer market.
These exchanges seem very similar, but they have plenty of differences. Here are some key ones.
What’s the difference between an auction market and a dealer market?
The difference between these market types is the way that buyers and sellers communicate. In auction markets, such as NYSE, the trading is directly between buyers and sellers.
In dealer markets there’s a “market maker”, which is a middleman. The market maker buys and sells securities to create liquidity. They are known as “brokers” and they typically profit from the difference between the bid and ask price, known as the bid-ask spread.
“Bigger” can mean several things. It could refer to the number of stocks available or by the value of those stocks. If you’re talking about the number of stocks, NASDAQ is bigger. The New York Stock Exchange has around 2,400 stocks listed, while the NASDAQ has more than 3,500. This changes all the time as new stocks are listed, stocks are unlisted and companies decide to merge.
In terms of market capitalisation, the New York Stock Exchange is bigger, with a market cap of $26.64 trillion (about £21.26 trillion) against NASDAQ’s $23.46 trillion (around £18.72 trillion).
NASDAQ vs NYSE: Which is worth more?
The New York Stock Exchange is worth more. It’s actually the largest stock exchange by market capitalisation in the world, with NASDAQ coming in second. The New York Stock Exchange has a market capitalisation of $26.64 trillion (about £21.26 trillion) while NASDAQ has a market capitalisation of $23.46 trillion (around £18.72 trillion). This makes the New York Stock Exchange approximately 13% bigger than the NASDAQ.
NASDAQ vs NYSE: Which is more diversified?
These stock exchanges have very different offerings — you can trade thousands of stocks on both exchanges, so lack of diversification shouldn’t be too much of an issue with either exchange, although you’d be lacking global diversification as all of your stocks will be US stocks.
Stereotypically, the NYSE is full of large-cap blue chip companies that are deemed “safer” than the technology startup companies listed on NASDAQ. However, this is only partly true as some technology companies have seen such growth that they’ve become blue chip companies while listed on NASDAQ.
For companies, it’s cheaper to list their stocks on the NASDAQ by a significant margin, which is why you see a lot of new IPOs for companies listing on the NASDAQ. You’re certainly more likely to see well established companies on the NYSE and smaller, newer companies on the NASDAQ.
If you’re choosing between the 2, stocks on the NASDAQ could be seen as a little more appetising, simply because they’re exciting. But the best way to invest would be to create a diversified portfolio that includes stocks from both exchanges – this way you have a nice mix of well established companies and newer technology companies or startups.
There’s no reason why you’d need to pick one of these exchanges over another, as they could both be great in creating a portfolio with a diverse range of investments.
How to invest in the NYSE and NASDAQ
To invest in the NYSE and NASDAQ, you’ll want to either choose individual shares from the exchanges that take your fancy, or choose an index fund that represents some of the top stocks in each of the exchanges, like the NASDAQ-100 or the NYSE US 100. Here’s how it’s done:
Find an NYSE or NASDAQ ETF, index fund or mutual fund. Some index funds track the performance of all stocks on the index, whereas others only track a certain number of stocks or are weighted more towards specific stocks. You should select the fund that best suits your investment goals.
Open a share-trading account. In order to invest in the funds, you’ll need to open a trading account with a broker or platform. Keep in mind that some index funds may only be available on certain brokerages or platforms. The providers in our comparison table below let you invest in US shares. We’ve listed some index funds below that are listed on the London Stock Exchange (LSE).
Deposit funds. You’ll need to deposit funds into your account to begin trading. Some brokers may charge you deposit fees, or you may need to pay a forex fee in order for your pounds to be converted into US dollars.
Buy the index fund. Once your money has been deposited, you can then buy the index fund. You’ll generally pay a small annual fee to invest in an ETF or index fund.
Our top picks for where to invest in the NASDAQ and the NYSE
Free fund trading Expert insights Wide range of accounts
We analysed all popular share dealing platforms in the UK using 35 data points and combined this with our expert insight from using the apps. The platforms we've selected as best for each category offer stand-out features or a unique combination of elements for a specific aspect of investing. If we show a "Promoted for" pick, it's been chosen from among our partners and is based on factors that include special features or offers, and the commission we receive. Keep in mind that our picks may not always be the best for you – it's important to compare for yourself. More details in our full methodology.
What are the top holdings in the NYSE and NASDAQ?
NYSE
NASDAQ
VF Corporation
Apple
Walmart
Microsoft
Procter & Gamble
Amazon
JPMorgan Chase
Tesla
Exxon
Nvidia
Bottom line
The New York Stock Exchange and the NASDAQ may seem very similar, but they have different models of trading and vastly different stock types and stock values. Which one you might choose to invest with depends on the types of stocks you’re looking for. Some investors favour new (and riskier) technology stocks over blue chip companies that might have more stability.
There’s no reason why you need to choose a side. Most providers that offer one of these exchanges will also offer the other one, so you could choose stocks that you like from both exchanges, and more worldwide exchanges, to create a portfolio of stocks that you like.
Frequently asked questions
NASDAQ has more stocks than the NYSE, but the New York Stock Exchange has a higher market capitalisation and is approximately 13% larger (in value) than the NASDAQ.
It’s cheaper for companies to list on the NASDAQ, which might be a key reason. The NYSE used to be known to only accept large and well established companies, while the NASDAQ was known to accept smaller companies.
Yes, shares can list on more than 1 exchange. This is known as a dual listing.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Zoe was a senior writer at Finder specialising in investment and banking, and during this time, she joined the Women in FinTech Powerlist 2022. She is currently a senior money writer at Be Clever With Your Cash. Zoe has a BA in English literature and a Diploma for Financial Advisers. She has several years of experience in writing about all things personal finance. Zoe has a particular love for spreadsheets, having also worked as a management accountant. In her spare time, you’ll find Zoe skating at her local ice rink. See full bio
Zoe's expertise
Zoe has written 163 Finder guides across topics including:
Find out how you can invest in Nasdaq and compare a range of leading brokers which can let you invest in US stocks cheaply and quickly.
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