What is ‘Wall Street’
Wall Street is a street in lower Manhattan that is the original home of the New York Stock Exchange and the historic headquarters of the largest U.S. brokerages and investment banks. The term Wall Street is also used as a collective name for the financial and investment community, which includes stock exchanges and large banks, brokerages, securities and underwriting firms, and big businesses. Today, brokerages are geographically diverse, allowing investors free access to the same information available to Wall Street’s tycoons.
Explaining ‘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. The area became a center of trade in the 1700s, and in the late 1790s publicly traded investments were issued. The New York Stock Exchange, the world’s largest stock exchange in terms of market capitalization, can trace its roots to this time, and area. After World War I, Wall Street and New York City surpassed London to become the world’s most significant financial center. Today, Wall Street remains the home of several important financial institutions. The New York Stock Exchange is still found on Wall Street as is the American Stock Exchange along with several banks and brokerages.
Financial Firms
Wall Street, when used as a metonymy, expands to institutions located around the world. While Wall Street in lower Manhattan is an important location where a lot of financial institutions are located, the globalization of finance has led to financial institutions being found around the globe. Also, in this reference Wall Street if often shortened to simply “The Street”. This moniker is often quoted in the media. For example, when reporting a company’s earnings, the media maycompare a company’s revenues to what “The Street” was expecting. In this case, they are comparing the company’s earnings to what financial analysts expected revenues would come in as.
Wall Street vs. Main Street
While Wall Street often refers to the global finance and investment community, it is often compared and contrasted to Main Street. Main Street is often used as a metonym for individual investors, small businesses, employees and the overall economy. Main Street is a common name for the principal street of a town where most of the town’s businesses are located. There is often a perceived conflict between the goals, desires and motivations of Main Street compared to Wall Street, with Wall Street representing big businesses and financial institutions and Main Street representing the little guy and small businesses in general.
Further Reading
- The formula that killed Wall Street – rss.onlinelibrary.wiley.com [PDF]
- Anomalies: A mean-reverting walk down Wall Street – www.aeaweb.org [PDF]
- Stock price reactions to the Wall Street Journal's securities recommendations – www.cambridge.org [PDF]
- Stock prices and Wall Street weather – www.jstor.org [PDF]
- Contagion in emerging markets: when Wall Street is a carrier – link.springer.com [PDF]
