What Is Wall Street?
What Is Wall Street?
Wall Street is literally a street located in New York City—at the southern end of Manhattan, to be precise. But figuratively, Wall Street is much more: a synonym for the financial industry and the firms within it. This connotation has its roots in the fact that so many brokerages and investment banks historically have established HQs in and around the street, all the better to be close to the New York Stock Exchange (NYSE).
While being on Wall Street is no longer de rigueur for a financial-industry firm (many, in fact, are located all around the country) or even to trade stocks (which primarily happens online now), the term « Wall Street » still means business—the investment business—and the interests, motivations, and attitudes of its players.
Key Takeaways
- Wall Street is a street located in the lower Manhattan section of New York City.
- Wall Street is used as an umbrella term to describe the financial markets and the companies that trade publicly on exchanges throughout the U.S.
- Wall Street has been the historic headquarters of some of the largest U.S. brokerages and investment banks and is also the home of the New York Stock Exchange.
- Wall Street is often contrasted with Main Street, a metaphor for small businesses and companies, and individual investors and employees.
- Events that happened on or around Wall Street often have impacted not just the investment industry, but the U.S. (and even the global) economy.
Understanding Wall Street
Although Wall Street and its surrounding southern Manhattan neighborhood—known to locals as « the Financial District »—remains an important location where a number of financial institutions are based, the globalization and digitization of finance and investment have led to many American broker-dealers, registered investment advisors, and investment companies being established around the country.
Still, « Wall Street » remains a collective name for the financial markets, the companies that trade publicly, and the investment community itself: stock exchanges, investment and commercial banks, brokerages and broker-dealers, financial services, and underwriting firms.
It’s a globally recognized expression, symbolizing the U.S. investment industry and to some extent the U.S. financial system. Both the New York Stock Exchange (the largest equities-based exchange in the world) and the Federal Reserve Bank of New York—arguably the most important regional bank of the Federal Reserve System—are based in the Wall Street area.
Wall Street is often shortened to « the Street, » which is how the term is frequently used by those in the financial world and in the media. For example, when reporting a company’s earnings, an analyst might compare a company’s revenues to what the Street was expecting. In this case, the analyst is comparing the company’s earnings to what financial analysts and investment firms were expecting for that period.
The Importance of Wall Street
Wall Street has had an important impact both culturally and economically.
Economic Importance
The United States is the largest economy in the world and New York City is its financial center. As Wall Street is synonymous with New York’s financial sector, and to a degree, the American financial sector, its global importance is unparalleled.
Wall Street consists of some of the largest financial institutions in the world, employs hundreds and thousands of people, and consists of the New York and Nasdaq stock exchanges; two of the largest stock exchanges in the world that list some of the largest companies, like Amazon, Google, Apple, and Exxon.
The economic importance extends throughout the American and global economy, as many of these firms do business globally, extend loans to a variety of businesses and individuals, and finance large-scale, global projects.
Cultural Importance
Wall Street’s cultural influence extends to movies, TV shows, books, and more. Movies such as Wall Street, Margin Call, Boiler Room, Barbarians at the Gate, and more, highlight what the fast-paced life is like on Wall Street, displaying an exciting, wealthy, and interesting lifestyle.
Large players on Wall Street have become celebrity icons, for good and bad, such as Warren Buffett, Jamie Dimon, Carl Icahn, Bernie Madoff, George Soros, and Larry Fink. The term Wall Street instills an idea of power, the elite, and often unscrupulous behavior in the imagination of many.
During times of economic trouble, such as the financial crisis of 2008, Wall Street becomes a scapegoat and the ills of the economy are blamed on the greed that runs through Wall Street. There is no other financial sector that has become so woven into the global culture.
History of Wall Street
Wall Street got its name from the wooden wall Dutch colonists built in lower Manhattan in 1653 to defend themselves from the British and Native Americans. The wall was taken down in 1699, but the name stuck.
Given its proximity to New York’s ports, the Wall Street area became a bustling center of trade in the 1700s. But its origins as a financial center began in 1792, when 24 of the most prominent brokers and merchants in the U.S. signed the Buttonwood Agreement (they reportedly gathered on Wall Street, under a buttonwood tree, to do business).
The agreement outlined the common commission-based form of trading securities—in effect, an effort to establish a members-only stock exchange. Some of the first securities traded were war bonds, as well as banking stocks for such institutions as the Bank of New York.
Out of this acorn of an agreement, the oak that became the NYSE grew. In 1817, the Buttonwood brokers renamed themselves The New York Stock and Exchange Board. The organization rented out spaces for trading in several locations until 1865, when it settled on a location of its own, at the corner of Wall and Broad Streets.
18 Broad Street
The address of the beating heart of Wall Street, the New York Stock Exchange, is a 1903 Neo-Classical structure of white marble. An adjacent annex, constructed in 1922, is located at 11 Wall Street, and another subsidiary building is at 20 Broad Street. These three buildings fill the block bounded by Wall Street on the north, Broad Street on the East, Exchange Place on the south, and New Street on the west.
As the U.S. grew, several other major exchanges established headquarters in the Wall Street area, including the New York Mercantile Exchange, the New York Board of Trade, the New York Futures Exchange (NYFE), and the American Stock Exchange, now known as the NYSE American Options.
To support the exchanges—to be where the action was—banks, brokerage firms, and financiers had offices clustered around Wall Street. In the late 19th and early 20th centuries, the House of Morgan, officially J.P. Morgan & Co.—the forerunner to JP Morgan Chase and Morgan Stanley—was right opposite the NYSE, at 23 Wall Street.
After World War I, New York City surpassed London to become the world’s largest and most significant financial center—and the financial center of NYC was Wall Street.
Wall Street vs. Main Street
Wall Street is often compared and contrasted to Main Street. The term « Main Street » is used as a metaphor for individual investors, small businesses, employees, and the overall economy. It’s derived from the common name for the principal street of a town where most of the local businesses are located.
There is often a perceived conflict between the goals, desires, and motivations of Main Street and Wall Street. Wall Street tends to represent big businesses and financial institutions, while Main Street represents mom-and-pop shops and small companies.
Key Events on Wall Street
Events that happened on or around Wall Street often have impacted not just the investment industry, but the U.S. (and even the global) economy and society. Here are some significant moments in Wall Street history.
1889: The Wall Street Journal
On July 8, 1889, Charles Dow, Edward Jones, and Charles Bergstresser launched The Wall Street Journal, a four-page afternoon newspaper devoted to objective financial and business news. The three men were reporters, but Dow was also a numbers-cruncher, who came up with the idea of creating a benchmark list of companies and their stock prices to represent the entire stock market.
Soon, the Journal was publishing the Dow Jones Industrial Average (DJIA) index—along with hundreds of prices of company stocks, bonds, and futures, and the average prime rate for bank loans. For nearly a century, before the advent of real-time internet listings, the Journal was the paper of record for the financial markets.
It also evolved into a leading, six-day-a-week periodical (also online, since 1996), a leading and well-respected source of financial and business journalism.
The three founders were operating out of offices in lower Manhattan. The fact that they chose to name their new publication « The Wall Street Journal » indicates that « Wall Street » already was something of an umbrella term for the finance world and its denizens. And in turn, the paper as it grew helped fix this meaning of the term in the public’s mind.
1920: The Wall Street Bombing
It was around noon on Sept. 16, 1920, when a horse-drawn cart pulled up at 23 Wall Street—right in front of the J.P. Morgan & Co. headquarters. One of the most bustling corners of the neighborhood, it was especially crowded with those headed out for lunch. The cart suddenly exploded: It had been packed with dynamite and filled with sash weights that sailed through the air.
It was, up to that time, the worst domestic bombing in U.S. history. Ultimately, 40 people were killed or died from their injuries, and another 300 were injured. The J.P. Morgan building’s interior was gutted. Marks from the shrapnel still are visible on the exterior.
No one claimed credit and the case was never solved. But because the explosion occurred in front of the Morgan building, known as a symbol of American capitalism, the bombing was ultimately decided to have been an act of terrorism performed by “Reds”—anarchists and communist sympathizers. A stack of anarchist flyers found in a mailbox a block away from Wall Street supported this theory.
As a result, the authorities arrested hundreds of suspected Reds and deported those of foreign nationality. The bombing also encouraged the nativist sentiments that developed in the U.S. during the 1920s, which led to tighter restrictions on immigration.
1929: The Stock Market Crash
The stock market crash of 1929 remains the worst financial crisis in U.S. history. In a pre-digital trading era, its epicenter was the New York Stock Exchange.
The Crash began on October 24 when, after nearly a decade of unparalleled, uninterrupted growth, the stock market opened lower than the previous session. Equities’ prices continued to drop throughout the day and, as the news spread, crowds began to gather outside the Exchange building.
They groaned as the market closed down again that day, cheered brokers during the next two days when the market seemed to rally—and then panicked on October 28 and October 29, when the declines resumed. Inside the stock exchange, the scene was sheer pandemonium as well, with prices falling too fast for ticker tapes and blackboards to even record them.
Ultimately, the DJIA was to fall 89% from its September 1929 peak, wiping out both corporate and individual wealth.
The crash ushered in the Great Depression. A quarter of America’s working population would lose their jobs as the U.S. economy went into a tailspin—followed by economies throughout Europe. In the end, the stock market crash and the ensuing decade-long depression directly impacted nearly every segment of society and altered an entire generation’s perspective and relationship to the financial markets.
What Does Wall Street Speculation Mean?
Speculation refers to the act of conducting a financial transaction—usually trading stocks, commodities, or assets that have a high risk-reward profile: that is, there is the possibility of substantial gains, but also substantial losses.
An investor who purchases a speculative investment is likely focused on the price fluctuations, rather than the fundamentals, of the asset; they believe the market has inaccurately priced it, and are trying to take advantage of that disparity before the market corrects its estimation. Speculative investments are often very short-term ones.
Wall Street speculators tend to be professional traders, as opposed to retail investors who buy and hold onto stocks or other assets for the long term.
What Time Does Wall Street Open and Close?
The major U.S. stock markets, including the New York Stock Exchange (NYSE) and the Nasdaq, are normally open 9:30 a.m. to 4 p.m. Eastern time, Monday through Friday. However, there are also extended-hour sessions earlier and later.
- Pre-market trading typically occurs between 8:00 a.m. and 9:30 a.m., though it can begin as early as 4 a.m. EST.
- After-hours trading starts at 4 p.m. and can run as late as 8 p.m. EST.
What Was Occupy Wall Street?
Occupy Wall Street was a 2011 protest movement against social and economic inequality that was centered in Zuccotti Park, located in Manhattan’s Financial District. It began on September 17, as hundreds of protesters camped out in the park. The police forcibly removed and arrested them two months later, on November 15. During the days, there were marches and speeches, calling for more balanced income distribution, better-paying jobs, bank reform, and less corporate influence in politics. « We are the 99%, » was the Occupy protestors’ slogan.
What Is Black Wall Street?
Black Wall Street was a nickname given to the Greenwood District of Tulsa, Oklahoma, one of the largest and most prosperous African-American business communities in the United States in the early 20th century. In May-June, 1921, its 35 blocks were destroyed during the Tulsa Race Riot, though it was quickly rebuilt, with over 80 businesses reopening by 1922.
More generally, « Black Wall Street » can also refer to any area of African-American high economic or financial activity.
How Do You Get a Job on Wall Street?
Getting a job on Wall Street often starts in college. Majors like finance, business administration and management, economics, accounting, and mathematics are natural fits for the investment industry, though firms will consider degrees in other areas too, like marketing or engineering. Try to get an internship at a Wall Street firm or similar institution for at least one summer.
After college, it helps to have a Master of Business Administration (MBA). But other areas of expertise can be of use, too, for certain targeted positions. Many research teams include at least one person with industry experience, like doctors for medical and pharmaceutical companies, or computer code-programmers for the semiconductor or high-tech fields.
It’s also important to target what type of Wall Street job you’d be best suited for. They break down into three main areas:
- Investment Team: research analysts, portfolio managers, and traders
- Operations: client relationship, marketing, risk assessment, legal, back-office functions
- Sales: those involved in the creation, promotion, and sale of stocks, bonds, IPOs, foreign exchange, and other financial instruments—and getting clients to buy them
The Bottom Line
Wall Street is both a literal street and a symbol. It’s home to a variety of financial and investment firms, along with institutions like the New York Stock Exchange and the Federal Reserve Bank of New York. Globally, it’s also come to connote the U.S. finance and investment community and industry: its interests, attitudes, and behavior.