What is a Closing Quote
A closing quote is a security's final regular-hours trading price for the day. Because of the forces of supply and demand, the previous day's closing quote will not necessarily be the next day's opening quote. The first trade of the next day will not occur until the first buyer and seller agree on a price. People use the closing quote to compare the change in the price of a security from day to day.
BREAKING DOWN Closing Quote
On most U.S. exchanges, closing quotes occur at 4 p.m. ET Monday through Friday as securities are traded on these days from 9:30 a.m. to 4 p.m. - except for major holidays, when the exchanges are closed. For the NYSE and Nasdaq, these holidays are New Year's Day, Martin Luther King Jr., Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The market close that produces closing quotes is the busiest part of the equity trading day. Many investors choose to trade at this time as it brings to together one of the highest concentrations of buyers and sellers. Investors can choose to trade specifically at the closing price of the day for a stock by submitting a market-on-close order. These orders must be submitted on the NYSE by 3:45 p.m. and on the Nasdaq by 3:50 p.m. to ensure execution.
Generating Closing Quotes and Extended Trading
Closing quotes on the NYSE, considered the most important price of the day for investors and exchange-listed companies since they reflect market interest in a stock, are generated through a closing auction. Due to the growing popularity of passive investment vehicles like ETFs and the growth in other trading venues, the closing auction on the NYSE now represents about 7% of NYSE-listed daily trading volume, a figure nearly double the volume from five years ago.
NYSE auctions combine both electronic trading technology and human judgment from the open outcry system of floor brokers physically located at trading stations on the exchange floor. Floor brokers known as Designated Market Makers (DMMs) help facilitate closing auctions on the NYSE. DMMs set closing prices based on all interest expressed in the stock through closing market and limit orders and also step in to trade to offset any auction imbalances between buyers and sellers present at the closing bell.
Nasdaq conducts a similar process to generate closing quotes called the closing cross. This closing process starts with begins with the receipt of all closing orders, called on-close and imbalance only orders. These orders are filled at prices set by the closing cross.
The highest trading volume still occurs during regular trading hours. However, shares can also be traded pre-market and after hours. The extension of the trading day outside of standard market hours facilitates trading of stock around events that typically result in significant price movements, such as the release of quarterly earnings reports, which occur before or after regular trading hours.