NASDAQ-100

NASDAQ-100. It is a stock market index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Launched by Nasdaq, Inc. in 1985, it has become a premier benchmark for technology and growth-oriented sectors. The index is distinct from the broader NASDAQ Composite and is renowned for its heavy weighting toward innovative firms in areas like software, semiconductors, and biotechnology.

History and development

The index was introduced on January 31, 1985, as a response to the growing prominence of the Nasdaq Stock Market as a listing venue for technology companies beyond the traditional industrial giants of the New York Stock Exchange. Its creation coincided with the rise of the personal computer revolution, led by firms like Microsoft and Intel. A pivotal moment in its evolution was the dot-com bubble of the late 1990s, where its value soared before a significant correction. In 1998, the First Trust launched the PowerShares QQQ trust, an exchange-traded fund that tracks its performance, vastly increasing its visibility. Further structural changes included the removal of financial companies in 2008 and a major rebalancing in 2011 to address the outsized influence of Apple Inc..

Composition and selection criteria

Eligibility requires listing exclusively on the Nasdaq Stock Market, excluding securities from the financial sector such as banks and insurance firms. Constituents are selected based on market capitalization, with weightings adjusted for float-adjusted shares. The index is reconstituted annually and rebalanced quarterly. It is heavily dominated by companies from the technology sector, including giants like Apple Inc., Microsoft, Alphabet Inc., Amazon.com, and NVIDIA. Other significant sectors represented include consumer services, with Tesla, Inc. and Costco, health care with Amgen and Gilead Sciences, and industrial with Old Dominion Freight Line.

Performance and notable milestones

The index has delivered substantial long-term returns, significantly outperforming the S&P 500 during the technology bull markets of the 1990s and 2010s. It peaked above 16,000 points in late 2021, driven by the performance of FAANG stocks and the artificial intelligence boom led by NVIDIA. Notable crashes include the dot-com bubble burst in 2000 and the Financial crisis of 2007–2008. It reached a symbolic milestone by crossing 10,000 points in 2020. Annual rebalancings often generate significant trading volume as ETFs like the Invesco QQQ Trust adjust their holdings to match the new weightings.

Related financial products

The primary and most liquid product tied to the index is the Invesco QQQ Trust, traded under the ticker NASDAQ:QQQ. A vast ecosystem of derivatives exists, including futures and options traded on the Chicago Mercantile Exchange. Numerous ETFs from providers like Direxion and ProShares offer leveraged or inverse exposure. Additionally, structured notes and mutual funds from firms such as Fidelity Investments and Charles Schwab Corporation use it as a benchmark. The index also underlies various index funds in retirement accounts managed by Vanguard Group.

Comparison with other indices

Unlike the S&P 500, which includes financial companies and aims to represent the broad U.S. economy, it is narrowly focused on technology and growth. The Dow Jones Industrial Average is a price-weighted index of 30 established industrial companies, making it less dynamic. The Russell 2000 tracks small-cap companies, offering a contrast in market segment. The NASDAQ Composite includes all stocks on the Nasdaq Stock Market, providing a broader but more diluted view. Internationally, it is often compared to technology-heavy indices like the Hang Seng Tech Index in Hong Kong or the Euronext 100 in Europe.

Category:Stock market indices Category:Nasdaq