That doesn’t mean, however, that there isn’t overlap between the two. In contrast to Wall Street - which is focused on profiting from movements in the financial markets - Main Street is more interested in investing in those markets.
A mom-and-pop retail store or restaurant would fit the definition of Main Street as would a small, family-owned investment or insurance company.īut perhaps what defines Main Street the most is its intentions. When you invest $5,000 in a mutual fund, for instance, you’re putting your capital into Wall Street.Īs a term, “Main Street” also describes the broader economy itself and the smaller firms that aren’t connected directly to the financial services sector. Main Street can be thought of as representing the little guys - the everyday investors in capital markets and the small business owners who look to Wall Street to help them grow their money. When stock prices soar during a bull market, for example, consumers usually spend more money because they have confidence in where the economy is headed. That in turn can spur economic growth. What happens on Wall Street can also influence consumer behavior, which in turn shapes economic trends. It was Wall Street’s treatment of mortgage securities that played a starring role in the housing crash and the recession that followed. Think back to the financial crisis of 2008. A Wall Street analyst might look at things like a company’s most recent earnings report and their previous year’s revenues as a basis for creating an investment strategy.įrom an economic perspective, Wall Street matters because much of what happens there can directly impact the broader economy. Wall Street is primarily concerned with big business and the actions of corporations and publicly traded companies. Their main objective, of course, is to generate profits for companies and other large investors. Collectively, “Wall Street” refers to the people and organizations that are directly connected to the stock market, including the stock exchanges, investment banks, large corporations, brokerages and other financial institutions.