5 Things to Know Before the Stock Market Opens

The stock market is up and running before many stores open their doors. Depending on what time zone you’re in, the morning start doesn’t leave much time to get ready for the trading day. Most global stock exchanges operate during daily weekday hours.

If you're new to the stock market, here are 5 things to know before the stock market opens. 

When is the Stock Market Open?

The Nasdaq and New York Stock Exchange (NYSE) are open from 9:30 a.m. to 4:00 p.m. Eastern Time from Monday to Friday. Most stock exchanges around the world allow trading Monday through Friday, except the Saudi Stock Exchange, which operates from Sunday to Thursday. 

Some stock exchanges, predominantly Asian, also close during the day for a short lunch break. The London Stock Exchange takes a two-minute break at noon every day. 

The pre-market trading duration is from 6:30 a.m. to 9:30 a.m. EST, while the after-market trading duration is from 4:00 p.m. to 8:00 p.m. EST. However, these extended trading hours have lower trading volume. Online brokers usually let investors trade during these hours. 

The stock market is also closed during market holidays. In 2024, the U.S. stock markets remained closed for 10 days. 

• New Year's Day (Jan. 1, 2024)
• Birth of Martin Luther King, Jr (Jan. 15, 2024) 
• Washington's Birthday (Feb. 19, 2024) 
• Good Friday (March 29, 2024)
• Memorial Day (May 27, 2024) 
• Juneteenth (June 19, 2024) 
• Independence Day (July 4, 2024) 
• Labor Day (Sept. 2, 2024) 
• Thanksgiving Day (Nov. 28, 2024) 
• Christmas (Dec. 25, 2024)

The market also observed half-days on two days. During half-days, the market closes at 1:00 p.m. EST.

• Day before Independence Day (July 3, 2024)
• Day after Thanksgiving (Nov. 29, 2024)

Understanding the Meaning of Pre-Market Trading

Pre-market trading means trading before the market opens. During this period, the market has limited liquidity and volume. Many stocks may not experience significant activity unless a major event is happening outside of the regular trading hours. 

Pre-market trading is beneficial for: 

• Reacting to overnight news: If a company issues an earnings report or there is other significant news, pre-market trading allows investors to respond to the news before the official market opening. 
• Convenience: Some investors don't have the time to trade during standard market hours and prefer the flexibility of pre-market trading.

However, there are a few downsides, too. 

• Price uncertainty: The price of stocks in pre-market conditions can significantly differ from that of the regular hours. Also, pre-market prices are a reflection of some electronic communication networks (ECNs) only. It's only when the market opens that major exchanges, market makers and ECNs all come together to form the official opening price.
• High competition: Most traders active during the pre-market hours are professional and institutional investors, making it a highly competitive environment for the average individual investor.
• Limited liquidity: Since there's limited liquidity in pre-market hours because of fewer traders, there's a higher chance of large price swings and stock volatility.

5 Things to Consider Before the Market Opens

Let’s move on to 5 things to know before the stock market opens. 

Reviewing Overnight News and Earnings Reports

Before the market opens, take a look at the overnight news. Did any major political or economic event occur while the market was closed? It could potentially affect a company's stock prices. 

For instance, after the news of China planning to expand its iPhone use ban to state companies and government-backed agencies came out, Apple's shares dropped by 5.1%. 

Besides political news items, look for news related to a company's internal operations, such as acquisitions or partnerships. For instance, when Elon Musk backed out of the $44 billion deal to buy Twitter, the social media platform's stock price fell. 

If a company releases its earnings report, that could also have a significant impact. Suppose a company's earnings report shows that it did not live up to market expectations. In that case, its stock prices may decline. The contrary is also true. 

Apple is a good example here. The company's stock fell in August 2023 after it announced an expected decline in the September quarter.

Keeping an Eye on World Events and Economic Indicators

World events also affect market updates since companies often have global operations. The COVID-19 pandemic is an excellent example here. Amid the global pandemic, all groups — 11 in total — in the S&P 500 fell. Eight of them saw a decline of 10%. 

It's also important to consider key economic indicators and how they're changing worldwide. Examples of these indicators are unemployment, inflation, interest rates, the consumer price index, trade and investments. 

For instance, when interest rates are high, value stocks may perform better compared to growth stocks. During periods of high interest rates, investors are reluctant to pay more for stocks. Lower demand eventually drives down stock values. Conversely, low interest rate environments often support stock market prices.

International trade and investments also influence market action. For example, trade restrictions between countries affect the supply chain costs of many companies. Consequently, such events impact their profitability and stock performance.

Using Technical Analysis and Market Sentiment

Technical analysis means studying historical and current trends to determine the future price of the best stocks. It involves several charts and indicators to assess the market situation and make informed decisions. 

Besides technical analysis, it's also imperative to gauge investor confidence and market sentiment. Some factors that affect market sentiment are: 

• Political stability 
• Public health situations 
• Geopolitical tensions and international relations 
• National economy and fiscal policies 
• Company news and earnings reports 

Investor sentiment may impact the market. For instance, during times of political instability or economic uncertainty, investors may become more risk-averse and cautious, leading to a decrease in market activity. 

Utilizing Stock Futures

A stock future is an agreement to buy or sell a specific stock at a predetermined price and date. A seller and buyer enter this contract, with the buyer agreeing to pay the specified price on a specific date. 

Futures contracts are leveraged instruments that allow traders to amplify both gains and losses on invested capital.

Traders may use stock futures to gauge the future expected value of stock. Let's say Stock X is currently trading at $50 per share, but its futures contract states that by the end of the month, it will be trading at $60 per share. That expected value is generally based on funding rates and expected dividend payments in the stock, along with potential speculation on the stock price.

Find Out What Industry Experts Are Saying About the Market

Industry experts follow the market and provide professional insight on trends and factors that may influence the market.  

Beginners can consult the analysis from industry experts to gain additional perspective. These experts share their knowledge, analysis and news tips through various paid and free channels, such as premium industry reports, television segments, social media, blogs and websites. 

Be Prepared When the Stock Market Opens 

You now know what to keep an eye on before the stock market opens, whether it’s market news or expert insight. The next step is to learn how to trade on the stock market. 

That's where Benzinga Pro comes in. Get actionable stock news and trading signals from Benzinga's experts that you can then apply to your trades. Besides, you get daily stock alerts and exclusive market stories to base your trading decisions on. Sign up today for a free trial to get market moving news alerts and access to stock analysis.

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