Why Is the Market Closed on Good Friday?

Financial markets in the United States routinely observe closures on certain holidays. Among these observed days, Good Friday stands out as a unique instance where major financial exchanges halt trading. This annual closure prompts many to inquire about the underlying reasons, particularly since it differs from the typical federal holiday schedule. Understanding the rationale behind this market tradition involves examining historical practices and the specific types of financial entities affected.

The Primary Reason for Closure

The closure of U.S. financial markets on Good Friday stems from a long-standing historical tradition. This practice acknowledges the religious significance of Good Friday as a Christian holiday commemorating the crucifixion of Jesus Christ. Major exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ, have historically chosen to close their trading operations on this day. This deep-rooted custom predates many contemporary financial regulations, with the NYSE first closing for Good Friday in 1864.

One practical consideration supporting this closure is the anticipated reduction in trading activity, as many market participants may observe the day for religious or personal reasons. Closing the markets helps to maintain orderly trading conditions and sufficient liquidity, preventing potential volatility that could arise from fewer participants.

Which Financial Markets Close

On Good Friday, closures extend across significant U.S. financial markets. Both primary U.S. stock exchanges, the New York Stock Exchange (NYSE) and NASDAQ, cease trading for the entire day. This impacts equity instruments, including stocks and indices such as the Dow Jones Industrial Average and S&P 500.

In addition to stock markets, U.S. bond markets also typically observe a full closure on Good Friday. The Securities Industry and Financial Markets Association (SIFMA) provides recommendations for fixed-income market holidays, which generally include Good Friday. While these key U.S. markets are closed, not all global financial activities halt. Some international markets, particularly in regions where Good Friday is not observed as a public holiday, may remain open, and certain trading platforms like cryptocurrency markets operate continuously.

Good Friday as a Non-Federal Holiday

Good Friday’s status as a holiday in the United States is often misunderstood. It is not recognized as a federal holiday by the U.S. government. This means federal government offices, including agencies and postal services, generally remain open and operate on their regular schedules. Many private businesses and some state or local government offices may elect to close or operate with reduced hours. This highlights that while federal holidays dictate government and banking closures, the market’s observance of Good Friday is a separate, long-standing industry practice.