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What Is the Nasdaq 100 Index?

The Nasdaq index is a widely followed stock market index and can provide valuable insights about the state of the markets and the economy.

As such you may want to familiarize yourself with this index and learn how it works.

Here’s what you need to know about the Nasdaq 100 index:

Phone showing Nasdaq on trading screen.

What Is the Nasdaq and When Was the Nasdaq 100 Created?

To understand what the Nasdaq 100 index is, it is important to learn about the Nasdaq Stock Exchange, from which the Nasdaq 100 index emerged.

The Nasdaq Stock Exchange was founded in 1971 by the National Association of Securities Dealers (NASD) and introduced the world’s first computerized trading system that allowed for speedy and transparent trades.

In other words, the Nasdaq allows online trading activity such as the buying and selling of stocks.

The Nasdaq 100 index was created by the NASD in 1985, and you can get a more in-depth overview of the Nasdaq index’s history in our article titled “History of the Nasdaq 100.

What Does the Nasdaq 100 Index Measure?

The Nasdaq 100 is an index that tracks the movement of the shares of 100 of the biggest large-cap companies in the world, similar to the S&P 500 (S&P500) and the Dow Jones Industrial Average (USA 30).

Moreover, it is important to note that the Nasdaq is considered tech-heavy and tracks the largest non-financial companies listed on the Nasdaq according to market capitalization.

Accordingly, this provides traders with an opportunity to view the collective movements of the Nasdaq’s top companies, notably within the technology sector, which has shown strong growth after the dot-com bubble of the early 2000s.

How Is the Nasdaq 100 Measured?

The Nasdaq 100 is a modified market-capitalization-weighted index. This style of calculation gives more weight to the larger market-cap companies on the composite.

What Companies Are in the Nasdaq 100?

The Nasdaq100 is made up of some of the world’s largest and most well-known companies.

As of March, 2024, here are the Nasdaq 100’s top-listed companies by market capitalization:

Company Market Sector Approximate Market Capitalization

Microsoft (MSFT)

Technology

$2.9 trillion

Apple (AAPL)

Technology

$2.6 trillion

NVIDIA (NVDA)

Technology

$2.2 trillion

Amazon (AMZN)

Technology

$1.8 trillion

Alphabet (GOOG)

Technology

$1.6 trillion

Meta (META)

Technology

$1.2 trillion

Broadcom (AVGO)

Technology

$631.9 billion

Tesla (TSLA)

Consumer Discretionary

$562.2 billion

Costco (COST)

Consumer Discretionary

$343.4 billion

Advanced Micro Devices (AMD)

Technology

$340.3 billion

*Subject to operator availability.

As mentioned above, the Nasdaq is considered tech-heavy as the majority of its constituents are tech stocks.

In total, the index actually consists of 102 symbols even though there are only 100 companies on the index. This happens when a company has dual listings, such as Google’s parent company Alphabet.

For example, Alphabet has both ‘Class A’ (GOOGL) and ‘Class C’ (GOOG) listings. These may also be known as ‘Common shares’ and ‘Preferred shares’. The variations offer different benefits to the shareholder such as voting rights and entitlements to dividend payouts.

What Sectors Does the Nasdaq 100 Measure?

While the majority of companies on the Nasdaq 100 are from the technology sector, this index also measures the performances of stocks from the following sectors:

  • Healthcare
  • Consumer Goods & Services
  • Industrials
  • Financials
  • Basic Materials
  • Consumer Staples
  • Real Estate
  • Energy
  • Utilities
  • Telecommunications

Nasdaq 100’s Price Chart & Returns by Year

Nasdaq Price Chart

While the Nasdaq 100 price chart shows volatility, the overall trajectory of this tech-heavy index shows a whopping rise in value from 1978 to 2023.

NASDAQ 100 historical price chart

Nasdaq Annual Returns

Annual returns are a calculation of the Nasdaq 100’s closing price on the last trading day of the year to the closing price on the last trading day of the following year. The below chart shows the Nasdaq’s annual returns from 1986 to 2023.

Year Return

2023

53.81

2022

-32.97

2021

26.63

2020

47.58

2019

37.96

2018

-1.04

2017

31.52

2016

5.89

2015

8.43

2014

17.94

2013

34.99

2012

16.82

2011

2.7

2010

19.22

2009

53.54

2008

-41.89

2007

18.67

2006

6.79

2005

1.49

2004

10.44

2003

49.12

2002

-37.58

2001

-32.65

2000

-36.84

1999

101.95

1998

85.3

1997

20.63

1996

42.54

1995

42.54

1994

1.5

1993

10.58

1992

8.86

1991

64.99

1990

-10.41

1989

26.17

1988

13.54

1987

10.5

1986

6.89

Nasdaq VS. Other Indices

The Nasdaq 100 may often be compared to the S&P 500 and the Dow Jones Industrial Average which are also American stock indices.

Here are the main differences between the three:

Nasdaq 100 VS. the S&P 500

Whereas the Nasdaq 100 is more tech-weighted, and as such, provides a more nuanced overview of the tech market, the S&P 500 is more general as it measures 500 of the most leading US companies from various industries.

Nasdaq 100 VS. Dow Jones Industrial Average

The Nasdaq is both a stock market index and an exchange, while the Dow Jones Industrial Average is only an index. Additionally, the Nasdaq only measures Nasdaq-listed stocks, whereas the Dow Jones Industrial Average measures stocks listed on the Nasdaq Exchange and the New York Stock Exchange (NYSE).

How to Trade the Nasdaq 100

Given this index’s importance to the financial markets and the economy, many individuals may be interested in either trading the Nasdaq or investing in the Nasdaq.

One of the main ways to trade the Nasdaq may be through Plus500’s US-TECH 100 (NQ) Contracts for Difference (CFDs) which are derivative contracts that allow traders to speculate on rising and falling Nasdaq prices without having ownership of the underlying index.

Plus500’s NASDAQ 100 offering is named the US Tech 100. CFD traders can also trade CFDs on QQQ*, a popular ETF that tracks the price of NASDAQ 100 futures.

*Availability subject to operator.

Nasdaq 100 Volatility & Risks

Beyond the fact that generally speaking, the Nasdaq has yielded multiple returns throughout the years, it is important to note that this index is volatile, and the market can be unpredictable.

Moreover, since this is a tech-heavy index, in times of economic uncertainty and high inflation, it can experience some drops, given the susceptibility of tech stocks to such economic downturns.

FAQs

How is the Nasdaq calculated?

The Nasdaq 100 is weighted by market capitalization. This means that the Nasdaq’s value is based on the total value of Nasdaq 100 companies’ shares multiplied by their close prices.

What companies are part of the Nasdaq 100?

As of March 2024, some of the 100 companies on the Nasdaq include Amazon, Alphabet, Apple, NVIDIA, Netflix, and more.

What factors affect the Nasdaq 100 performance?

Some of the factors that can shift the Nasdaq 100 include market sentiment, companies’ earnings, and political news.

What are the key sectors represented in the Nasdaq 100?

The Nasdaq 100’s sectors are consumer discretionary, basic materials, technology, health care, consumer staples, industrials, telecommunications, and utilities.

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