What is Wall Street? Role in the global financial market
September 9, 2023
At the southern end of Manhattan, New York City, Broadway Street will meet with Wall Street, which is literally a Street located in New York. If you have been involved in Forex trading, you know that Wall Street plays a huge role in global financial markets, but it’s not the street but the financial industries and the firms within it that have the power to shake the international market. Walking down Wall Street, you will find investment Banks and brokerage headquarters around the street; Wall Street extends about seven blocks from Broadway to the East River. The New York Stock Exchange is located at 11 Wall Street. You will find New York Federal Reserve Bank at 33 Liberty Street, NASDAQ on First Liberty Street, Goldman Sachs at 200 West Street, and JP Morgan Chase at 277 Park Avenue.
Historically, being on Wall Street was the first requirement of financial institutions, but today, firms and investment banks are located anywhere around the world. And yet the term “Wall Street” corresponds to business and high finance.
Table of Contents
Understanding Wall Street
Back when it all started, Wall Street refers to a buttonwood tree, which was a place for traders to meet; in 1792, the Street Bazaar under the famous Buttonwood tree formalized the rules of the game and created the New York Stock Exchange.
Today, although not every big company has to be located on Wall Street to have a say in the market, it is still known to locals as the financial district where several financial institutions are based.
The symbols of Wall Street are financial markets, investment community, Stock Exchange, Investment Banking firms, commercial firms, brokerage and broker-dealers, and Financial Services.
Wall Street symbolizes the US Financial system and represents the New York Stock Exchange, the largest equity-based Exchange in the world, and the Federal Reserve Bank of New York.
The term is a cluster and a concept A referring to financial analysts and investment firms and is often shortened to the street. Analysts might compare a company’s revenue to what the street was expecting.
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The role of Wall Street
Wall Street contains the stock market, bond market, commodities, futures Market, and security market. The original function of the street was to provide funds for companies to grow. But later, security trading became so profitable, and now you can’t find Securities on anything you can think of. The Wall Street importance can be discussed in two terms:
Financial importance
Wall Street is located in the United States, the largest economy in the world, which magnifies the importance of Wall Street in the global Finance Market. Wall Street is home to the largest financial institutions in the world, including NASDAQ and the New York Stock Exchange, two of the world’s largest stock exchanges. You will find companies like Amazon, Google, Apple, and Exxon listed on these exchanges.
The economic importance of this is that it is not limited to the borders of the United States and extends throughout international economies.
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Cultural importance
The economic importance of Wall Street has led the name to appear in Cinema and other Media. TV shows, books, and movies like Wall Street, Margin Call, Boiler Room, and Barbarians at the Gate are some of the movies that demonstrate the fast pace of life on Wall Street.
Media can turn large players on Wall Street into celebrity icons. Now, everyone around the world knows Warren Buffett, Jamie Dimon, Bernie Madoff, George Soros, and Larry Fink. In the cultural aspect, the term Wall Street equals power and elite.
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The History of Wall Street
In 1653, Dutch colonists built a wooden wall to defend themselves from the British and Native Americans. The wall was made of wood and didn’t last for so long. It was torn down in 1699, but the name stuck. Later, in the 1700s, Wall Street became the center of trade in the United States. Later, in 1792, 24 brokers met under the Buttonwood tree and signed the button with the agreement. They have created a members-only stock exchange and gathered on Wall Street under a Buttonwood tree to do business. In 1817, those Brokers became the New York Stock and Exchange Board. As the US grew, other investment firms established headquarters in the Wall Street area. Back then, banks, brokerage firms, and financials clustered offices on Wall Street to support the exchange.
Why Wall Street is important?
Wall Street plays a huge role in the Global Financial Market for two good reasons:
The New York Stock Exchange, which is the biggest Stock Exchange in the world in terms of trading volume, is located on Wall Street.
The headquarters of the NASDAQ Stock Exchange is also located on Wallace Street, which is the second largest exchange globally.
Without considering the Federal Reserve،, JP Morgan, and other financial leaders located on Wall Street, just wait is home to two of the biggest exchanges in the world that can make it the world’s financial capital.
Big names like JPMorgan Chase, Goldman Sachs, Bear Stearns, and Citigroup are located on this street and are the biggest players in the United States economic sector. In order to understand the importance of Wall Street, we are going to discuss some factors that explain the relevance of Wall Street to the global economy.
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The role of the USA in the global economy
The USA is involved in global economic affairs, and Wall Street is the central part of financial power in the United States. To understand the magnitude of the US economy, you should know that the GDP of the USA is about 22 trillion dollars, demonstrating the nation’s considerable economic productivity.
Wealth concentration
The biggest players in financial markets, along with the largest and busiest stock markets, are doing business on Wall Street. Global investors try to invest in companies located on the streets; for example, Warren Buffett, a celebrity icon, invested in Goldman Sachs. It is interesting to know that the global billionaire wealth comprises over 12 trillion dollars, with USA billionaires accounting for 4.5 trillion dollars.
As you can see, a considerable amount of the world’s wealth concentrated in the United States.
Financial investment
The fame and the glory of Wall Street started with the security market and trading stock which made many Americans billionaire. The variety of financial investment vehicles, such as high-yield savings accounts, short-term certificates of deposit, index funds, dividend stock funds, and value stock funds, are some of the most popular investment vehicles.
Important moments in Wall Street history
Financial events that happened on or around Wall Street have a huge influence on the entire Global Market. In the following, we will discuss some of the most significant moments in the history of Wall Street.
- 1889
Back then in 1889, the Wall Street Journal was launched; it was a four-page afternoon newspaper devoted to objective financial and business news.
Charles Dow was one of the three founders of the journal who came up with the idea of creating a benchmark list of companies and started to publish the Dow Jones Industrial Average, which has been online since 1996. The fact that the founders chose This name indicates that Wall Street was already something back then.
- 1920
On September 16th, 1920, a horse-drawn Court exploded right in front of the headquarters of JP Morgan. Forty people were killed, and 300 were injured. It was the worst domestic bombing in US history back then.
- 1929
In 1929, the stock market crashed, which is considered the worst financial crisis in US history until today. The DJIA Poland to 89%.
- 1987
The S&P 500 and Dow Jones Industrial Average prolonged more than 25% in value in October 1987, which is known as Black Monday.
- 2007-2008
The unregulated use of derivatives resulted in the global financial crisis of 2007 and 2008, leading to the Great Recession.
The bottom line
Wall Street is both literally a street and a symbol of the financial market. A variety of Financial and investment firms, including the biggest names in the global financial market, are located in Wall Street. Big names such as the Federal Reserve Bank of New York and the New York Stock Exchange are there. The concentration of wealth in the United States, especially on Wall Street, indicates the economic importance of Wall Street.
In Aron groups, we provide you with different asset classes, including international currencies, cryptocurrencies, commodities, and stock indices. No matter what type of asset you are interested in, it is important to monitor the global market. As the USA is the world’s largest economy, you should learn the history and the impact of the United States economy on the Global Market.
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