What is a Stock Ticker, and What Does a Ticker Symbol Mean?

Most people know the stock ticker as the scrolling text at the bottom of a business news show or the top of a financial website. It’s an overwhelming amount of information for the uninitiated, so most people just tune it all out.

But what do those numbers actually mean?

They may look like hieroglyphics, but stock tickers are actually relatively simple to understand. If you can learn the basic language, you’ll be better equipped to follow the ups and downs of your investments and the markets they’re traded in.

Stock Tickers & Market Tickers Explained

Find out all you need to know about the two ticker types below.

What Is a Stock Ticker?

A stock ticker shows how individual stock prices and stock market indexes rise and fall. While the stock market is open, the stock ticker will change as the prices vary. After the market has closed for the day, the stock ticker will show the final results from that trading day. The market is generally open during regular business hours so the stock ticker will reflect the changing prices while the market is open.

There are thousands of publicly traded companies, but the stock ticker only shows the most important companies and indexes. For example, if you go to the CNBC web page and click on their “Markets” tab, you’ll see a stock ticker with the results for the S&P 500, Nasdaq, Dow Jones, and more.

If you want to look up a specific stock, you can search it for by its name or ticker symbol.

Examples of Stock and Market Ticker Symbols

Publicly-traded companies have a ticker symbol, which is an abbreviation of the company’s name. The ticker symbol will be used on the stock ticker instead of the company’s full name to allow for a simplified and more concise visual representation of the day’s trading.

Ticker symbols are usually very close to the company’s name. For example, McDonald’s has a ticker symbol of MCD and Visa’s ticker symbol is V.

Companies can choose their own ticker symbols, so many get creative with it. For example, the Cheesecake Factory’s ticker symbol is CAKE. Sealy Corporation, which makes mattresses, has a ticker symbol of ZZ.

There are multiple stock markets, and each market exchange has their own rules on how many letters the ticker symbols are allowed to have. Companies on the NYSE can have up to three characters, while those on the Nasdaq have four or five.

Companies can move from one stock market exchange to another. When this happened in the past, they were forced to change their ticker symbol to conform with the rules of their new exchange. For example, a company moving from the NYSE to the Nasdaq would have to switch to a four or five-letter ticker symbol. This rule was confusing for investors, because a market switch would force them to memorize new ticker symbols.

In 2007, the Securities and Exchange Commission (SEC) decided that companies moving from the NYSE to the Nasdaq could keep their ticker symbol if it had three characters.

At first, companies with only one or two characters were still forced to change their ticker symbol. But now, any company with a one or two-character ticker symbol can keep it when they move to an exchange with different rules. New companies trading on the Nasdaq are still not allowed to create three-character ticker symbols. Only new companies on the NYSE can do that.

Here are some of the most popular stocks and their respective ticker symbols:

1. IBM - (IBM)

2. Walmart - (WMT)

3. JP Morgan Chase - (JPM)

4. DuPont Chemical - (DD)

5. Johnson & Johnson - (JNJ)

6. Anthem - (ANTM)

7. Apple - (AAPL)

8. Intel Corp. - (INTC)

Most companies only trade on one exchange, but in rare cases there are a few listed on multiple exchanges. For a year, Charles Schwab was listed on both the NYSE and the NASDAQ, but in 2005 the company stopped being listed on the NYSE.

What is a Stock Market Index?

A stock market index represents a group of companies. The S&P 500 represents the 500 largest companies in the U.S. The Dow Jones Industrial Average is an index tracking the 30 companies that make up all major industries, excluding transportation and utilities.

An index gauges how well stocks are doing and is more objective than only looking at individual companies. When you hear a newscaster say that the S&P 500 is down 5%, it means that the composite value of all those companies has decreased by 5%.

Because a stock market index like the S&P 500 represents a large swath of companies, investors use it as a baseline for their own portfolios.

A stock market index may add or remove companies to better serve its mission. Because the S&P 500 is supposed to make up the 500 largest public companies in the US, it will weed out companies when they no longer fit that description.

For example, in May 2019, the S&P 500 removed Dean Foods from its list. The decision was made when Dean sold off a subsidiary, reducing it from a large company to a mid-size firm. Because the S&P 500 only tracks large companies, Dean Foods was no longer eligible for the index.

Financial brokerage firms have index funds that track the S&P 500 and other indexes. These index funds are very popular because they have low fees, provide access to a wide range of sectors, and have relatively consistent returns.

Stock Market Exchanges

There are 60 stock exchanges in the world, but only a few that most investors, especially those saving for retirement, care about.

Here are five of the biggest stock exchanges around the world and their symbols:

Stock Indexes

There are several stock market indexes that track groups of publicly traded companies:

S&P 500

The S&P 500 includes the 500 biggest companies in the US. It’s the most popular index for financial news media and investors. It’s a very common index fund because it represents so many blue-chip companies.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) is the oldest stock market index on this list, but also the smallest with only 30 companies. Because there are so few companies, it’s rare for the DJIA to replace a firm on its list.

Nasdaq Composite

The Nasdaq Composite index represents the thousands of companies on the Nasdaq stock market. This is one of the most diverse indexes because it contains more companies than the S&P 500 or DJIA.

There’s also the Nasdaq 100, which is made up of the 100 biggest domestic and international companies on the Nasdaq.

Russell 2000 (RUT)

The Russell 2000 Index is a list of the 2,000 smallest companies compiled in the Russell 3000 Index, which holds the 3,000 largest American companies. Tracking the Russell 2000 helps consumers see how well smaller companies are faring in the economy.

Financial Times Stock Exchange 100 (FTSE 100)

This is a stock market index comprising the 100 largest companies on the London Stock Exchange. The companies on this list mostly represent global firms, so the FTSE 100 is not a good gauge for how well British companies are doing.