Pre-Market and After-Hours Trading: Hours, Liquidity and What Moves

The hours

The regular session on the New York Stock Exchange and Nasdaq runs from 09:30 to 16:00 Eastern time. Around it sit two extended sessions. Pre-market trading runs from 04:00 to 09:30 Eastern, and after-hours trading from 16:00 to 20:00. In those hours orders are matched on electronic networks rather than through the exchanges' main sessions, and the prices printed there are real trades, visible on charts as the thin stretch before and after the main bar.

Other markets have their own versions. London has an opening auction before 08:00 and a closing auction at 16:30; Frankfurt's Xetra session runs 09:00 to 17:30 and the Frankfurt floor keeps quoting until 22:00; Tokyo, Hong Kong, Shanghai and Singapore have lunch breaks rather than extended hours. The hours of every venue are listed on the market-hours pages.

Why they exist

Companies release results outside the regular session on purpose, after the close or before the open, so that the market has time to read them before continuous trading begins. Most of the price adjustment to an earnings report therefore happens in after-hours or pre-market trading. Overnight news from Asia and Europe, central bank decisions in other time zones, and the US economic releases at 08:30 Eastern all land before the open, and the pre-market is where their first prices are set.

Thin liquidity

The defining feature of extended hours is how little trades. Volume in the pre-market is a small fraction of the regular session's, and after 18:00 it is smaller still. The consequences follow from that:

• Spreads are wide. A stock that trades a cent wide at 10:00 may be ten or twenty cents wide at 07:00.
• Prices move further on less. A few thousand shares can move a large stock several percent, and the move may vanish at the open when the full book arrives.
• Orders are usually limit orders only. Most brokers do not accept market orders in extended hours, precisely because the fill could be far from the last print.
• Not every stock trades. Many names print nothing at all before 08:00, and a chart's extended-hours line can be a single trade.

A pre-market move, up or down, is evidence about how the day may open; it is not the open. The regular session's first minutes, when every participant is present, regularly reverse what the pre-market did.

The auctions

The official opening price is set by the opening auction at 09:30, which matches the accumulated buy and sell orders at the single price that clears the most volume. The closing auction at 16:00 does the same and is the largest liquidity event of the day: index funds, which must trade at the closing price, send their orders there, and on index rebalancing days and options expiries a large share of the whole day's volume prints in the final seconds. The closing price it sets is the one used for index levels, fund valuations and most performance figures.

Imbalance data, published in the minutes before each auction, shows which way the unmatched orders lean, and the last minutes of the day often move in the direction of the imbalance.

Index futures and the implied open

While the stocks themselves do not trade overnight, the index futures do. S&P 500, Nasdaq 100 and Dow futures trade on CME Globex from Sunday evening to Friday afternoon with an hour's break each day, so the level of the index is quoted almost around the clock. The futures price in the morning, adjusted for fair value, gives the implied open: the level at which the cash index is expected to begin trading. It is the best single read on the market's reaction to overnight news before 09:30.

On the desk

The Market 24h Clock draws every venue's pre-market and after-hours sessions as dimmed arcs around the regular one, so the thin hours are visible at a glance, and the newswire's movers panel lists the stocks moving before the open and after the close.