What Is The NASDAQ Index?

What is the NASDAQ Index?

What is the NASDAQ Composite Index?

The NASDAQ Composite (NASDAQ) or NASDAQ-100 Index was launched on January 31, 1985, by the NASDAQ Stock Market (National Association of Securities Dealers Automated Quotations) to differentiate itself from the New York Stock Exchange (NYSE).
It consists of 100 American stocks that are listed on the NASDAQ stock exchange. The stock must be listed on the NASDAQ, and it must be a common stock of an individual company, thus excluding preferred stocks, exchange-traded funds (ETFs), and other types of securities. The index is designed to be representative of the NASDAQ stock market as a whole, not just the largest companies.
The NASDAQ Composite is one of the most widely followed stock indices in the United States and is typically one of the three “main” indices cited by investors, alongside the Dow Jones Industrial Average and the S&P 500 Index.

What is the NASDAQ-100 Index?

Another widely followed NASDAQ-based index is the NASDAQ-100. This index is often confused with the NASDAQ Composite Index, whose market value is also calculated, but what is the difference between them?
Instead of including all common stocks listed on the NASDAQ, the NASDAQ-100 Index includes only the stocks of the largest 100 non-financial companies listed. The 100 companies in the NASDAQ-100 make up more than 90% of the volume of the NASDAQ Composite Index.

The NASDAQ Financial-100 Index includes only financial companies, unlike the NASDAQ-100, which excludes them all. The NASDAQ Composite Index includes all companies listed on the NASDAQ. Therefore, the actions of the NASDAQ Composite may not be included in the NASDAQ-100 Index.
In January 1998, non-American (foreign) companies were accepted into the NASDAQ-100. Since 2014, the same company can issue multiple classes of stocks, so more than 100 stocks can be issued in the NASDAQ from a list of 100 companies.
The value of the NASDAQ takes into account the market value of the companies that make up the index, meaning that a change of even one dollar in a large company’s share on the NASDAQ will have a greater impact on the index than a one-dollar change in a smaller company’s share.

How many companies are in NASDAQ?

Given that the NASDAQ index has a high concentration of companies in the technology sector, particularly younger and fast-growing companies, the NASDAQ Composite Index is often considered a good measure of how well the tech market is performing, although it includes many sectors.
There are 3,626 securities listed on the NASDAQ stock exchange. Because some of the largest companies in the world are listed on NASDAQ, the index is considered to have significant weight in global markets. In fact, the top 10 stocks in the NASDAQ Composite account for about 47% of the index’s performance.

The largest stocks in the NASDAQ Composite:

Apple, Microsoft, Meta, Amazon, Tesla, Nvidia, PayPal, Intel, PepsiCo.

How to invest in the NASDAQ-100 Index?

Investing in the NASDAQ-100 Index means speculating on both the upward and downward movements of the NASDAQ index to take advantage of the moments when this group of 100 companies thrives and the times when this group goes through tough periods. Therefore, a trader will always have the opportunity to try to gain advantages from the index or minimize losses during bad trading sessions, as we can trade NASDAQ both buying and selling.
Investing in stock market indices is a great idea if you don’t have the time or desire to research and select individual stocks to invest in, or if you lack the necessary knowledge to properly evaluate stocks. If you have the time and desire to invest in individual stocks, that is a good option. However, if you don’t, it is better to invest through index funds, with the NASDAQ Composite being one of the most important.
Always remember that in trading the NASDAQ, you can participate in the US stock market in both directions, upward and downward.