So if I look at what the S&P ($INX) closed at yesterday and what it opened at this morning shouldn’t they be the same? Why are they off?
MSNs daily tracker shows a previous close of 1,113.84 but an open of 1,112.84.
Where did that point go?
You don’t have to buy and sell stocks on the major markets. You can do it in a coffee shop, if you want. Also, there are major markets in just about every time zone on the planet. So, the price it closes at in NY today has eighteen hours to fluctuate before the market in NY opens again.
Tris
The closing price is the price of the last trade of the day for a given stock. The opening price is the price of the first trade of the day. There’s no reason to expect that the open should exactly equal the close of the previous day. Things happen overnight to change trading strategy.
The answer is that there are trades of the securities within those indexes that occur after the closing bell at 4:00 pm ET and 9:30 am ET the next day. They are typically trades done by investors in other markets, that will influence the opening index value the next day.
Consider this: Big Tulip, Inc is selling for $100 a share at close Monday. After the NYSE closes it’s announced that the CEO of Big Tulip, Inc. has drained all the companies assets and was last seen on a jet to Brazil. Come Tuesday morning no one is going to bid/offer anything close to $100 a share. So the first share price listed may be 7 cents or some such.
No other markets are needed for such a change to occur.
Note that prices are “managed” by a few specialists at the major firms. (Which nowadays is a really tiny number. “Handful” is too large an estimate.) They are in contact with clients and know what sort of demand for buying and selling is going on well before the market opens. So they start off immediately with target prices in mind at the opening bell. They set prices hoping to get the right balance of matching transactions among the buyers and sellers.