Closing Bell: What It Means, How It Works, Types

What Is the Closing Bell?

The closing bell is a bell that rings to signify the end of a trading session at a stock exchange. The time for trading for higher earnings has passed. Not all exchanges use this traditional system, but the New York Stock Exchange (NYSE) does. The closing bell occurs at 4:00 p.m. EST (Eastern Standard Time). Between 1870 and 1903, a gong was used at the NYSE. A brass bell was then introduced when the exchange moved to its current home, and a brass bell is still in use today.

Understanding the Closing Bell

The bell at the NYSE is now controlled electrically, rather than rung by hand. The bell is used to control the continuous trading that occurs on the trading floors and across the marketplace.

NYSE began having special guests ring the closing bell on a regular basis in 1995. This daily tradition is highly publicized and often done by a company. Prior to 1995, ringing the bell was usually the responsibility of the exchange's floor managers.

Special Considerations

There are bells located in each of the four main sections of the NYSE, and once a button is pressed, each rings at the same time. The ringers press the button for approximately 10 seconds, and a gavel sitting in front is also used in conjunction with the sounding of the closing bell as a callback to the tradition of a gavel meant for keeping order during trading sessions.

Types of Closing Bells

The tradition of a closing bell ceremony can be found at other exchanges, such as the Nasdaq, that do not use actual bells to end their trading sessions. As with opening bell ceremonies, guests may be invited to a closing bell ceremony to bring the session to a close.

Guest ringers have included companies that are celebrating their first day of trading on the exchange. Charities and other noncommercial entities have also been invited to closing bell ceremonies, often in connection with a special occasion or organizational campaign.

As a metaphor and symbol, the closing bell is used by many media outlets to frame their coverage of any given trading day and to assess the overall performance of the marketplace. News programs specifically targeting the stock market's activity will often pause for the closing bell, then resume commentary to give an overview of how stocks performed, along with any information that comes to the surface after the markets close. It is not uncommon for companies to hold off on releasing news that might prove disruptive to trades until after the closing bell has been sounded.