What is the Nasdaq Composite?

What Constitutes The Nasdaq Composite?

The Nasdaq Composite is a market capitalization-weighted index of all common stock listed on NASDAQ. It includes several hundred companies and covers nearly all industries. The components of the index are reviewed quarterly, and the stocks that make up the index are reviewed annually. Companies must have a minimum public float of at least 50% of shares outstanding, be listed for at least six months, and have a daily average trading volume exceeding $10 million to be included in the index. The index is calculated by adding the current market capitalization of all companies in the index, multiplying that figure by the total number of component stocks, and dividing that total by the divisor, which is the sum of the component weights. The component weights are changed each quarter based on the rise and fall of the price of each component’s shares.

How is the Nasdaq Composite Index Calculated?

The Nasdaq Composite is a market capitalization-weighted index of all common stock listed on NASDAQ. It includes several hundred companies and covers nearly all industries. The index is calculated by adding the current market capitalization of all companies in the index, multiplying that figure by the total number of component stocks, and dividing that total by the divisor, which is the sum of the component weights. The component weights are changed each quarter based on the rise and fall of the price of each component’s shares. The index is calculated by adding the current market capitalization of all companies in the index, multiplying that figure by the total number of component stocks, and dividing that total by the divisor, which is the sum of the component weights. The component weights are changed each quarter based on the rise and fall of the price of each component’s shares.

Top 5 Components of the Nasdaq Composite

The top 5 components of the Nasdaq Composite are as follows: Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), and Alphabet/Google (GOOGL).

Apple (AAPL) - AAPL is an icon of the tech sector, a manufacturer of Mac computers, iPads, and iPhones. The company was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne in Palo Alto, California. This company owns the world's most valuable brand ($145 billion in 2017, according to Forbes). Microsoft (MSFT) - Microsoft started in 1975 when Bill Gates and Paul Allen found the “Altair BASIC” software on a magazine cover, and they decided to create their version. This software became the foundation for Microsoft’s flagship product, “Windows”. The company has gone beyond its initial software offerings, becoming a giant in the world of cloud computing.

Amazon (AMZN) - Amazon has a history that traces back to the 1990s when Jeff Bezos and other executives at the company decided that they wanted to expand beyond the publishing business and explore other opportunities. From its humble beginnings as a bookseller, Amazon has become the world’s largest online retailer, a major player in the growing world of cloud computing, and a leader in developing artificial intelligence and machine learning technologies.

Facebook (FB) - Facebook was founded in 2004 by Mark Zuckerberg and a group of fellow students at Harvard University; the company’s headquarters are now in Menlo Park, California. Facebook has become the world’s most popular social networking site, with more than 2 billion users worldwide as of August 2019.

Alphabet/Google (GOOGL) - Google was founded in 1998 by Larry Page and Sergey Brin, who were graduate students at Stanford University. The company’s original business plan involved the creation of an online search engine to make information more readily available to individuals around the world. Google has grown tremendously over the last 20 years, evolving from a simple search engine into a technology powerhouse with a broad range of business interests.

Historical Performance of the Nasdaq Composite

The Nasdaq Composite is at its highest level since 2000, but it’s been a volatile rise. Since the Nasdaq started in 1971 as a computer-design trade journal, it has experienced some drastic trends. Between the beginning of the 1980s and the end of the 1990s, the Nasdaq grew nearly 7,000%. However, the market took a huge hit between 2000 and 2002 with the decline of the dot-com bubble. The index fell 80% during this period. While it has recovered since then, the Nasdaq still has not reached the same levels it saw in 2000.

Is There a Trend Since the End of March?

The Nasdaq Composite has been on an upward trend since the end of March. The index broke a three-month uptrend in mid-February and fell about 10% from then until the end of March. Since then, it has climbed back up and is now trading near its highest level since the beginning of the year. The S&P 500, which is generally seen as a more accurate reflection of the U.S. stock market, has also been on an uptrend since the end of March but only about half as much. It is currently up about 5%.

Conclusion

The Nasdaq Composite is at its highest level since 2000, but it’s been a volatile rise. The index fell 80% between 2000 and 2002 due to the dot-com bubble, but it has since recovered. In the last three months, it has climbed back up and is now trading near its highest level since the beginning of the year. The S&P 500, which is generally seen as a more accurate reflection of the U.S. stock market, has also been on an uptrend since the end of March but only about half as much. Both indexes have gained since the end of March, but they’re also both more susceptible to falling short. If there’s a significant market correction ahead, the Nasdaq Composite and the S&P 500 are both likely to fall as well.