Why does the stock market open at a different level than it closed on the previous day?

Two reasons. !st, not all the paperwork is processed when the closing bell rings, as there IS a short timelag, and when it IS processed, affects the opening the following day. 2nd, more common, is after hours trading. After hours trading is most often done by overseas investors far removed by timezones, so they are trading during their regular day for their market.

The perceptions of market participants change over time due to various political, economic, and business news coming out in the news media. And for this reason market participants change the prices of their buy limit and sell limit orders.

If limit buy and limit sell orders were prohibited and only market orders were allowed. Then stock prices would open at the same level as they closed the previous day. But then the beginning of each trading day would be a nightmare for many traders because either buyers or sellers would be afraid to start trading at prices that they see as either too high or too low.

The closing value of each stock is the based on the price of the last transaction of that stock on that day.

The opening value of the stock is the first transaction of the next day.

There is nothing that forces these two transactions to have the same dollar per share value.

After hours trading is the key