NASDAQ Composite - Financial definition
Country
: United States of America
Concise definition of the term NASDAQ Composite
The NASDAQ Composite is a stock market index that includes almost all stocks listed on the NASDAQ stock exchange. It is widely used as an indicator of the performance of technology and growth companies.
Comprehensive definition of the term NASDAQ Composite
The NASDAQ Composite Index tracks the performance of more than 3,000 stocks listed on the NASDAQ stock exchange, making it one of the most comprehensive indicators of market activity, especially in the technology sector. Unlike the Dow Jones Industrial Average, which consists of only 30 large companies, the NASDAQ Composite includes a broad range of companies from various sectors, though it is heavily weighted towards technology firms.
It is a market-capitalization-weighted index, meaning larger companies have a greater impact on the index's performance. The index is known for its higher volatility compared to other major indices like the Dow Jones Industrial Average and the S&P 500, due to its heavy weighting in tech stocks.
Investors and analysts use the NASDAQ Composite to gauge the health of the tech industry and the broader market. Historical events, such as the dot-com bubble of the late 1990s and the significant tech stock sell-off in early 2022, underscore its role in reflecting market trends and investor sentiment.
Inception and Milestones
The NASDAQ Composite was first calculated on February 5, 1971, with a base value of 100. It reached the 5,000 mark for the first time in March 2000 during the dot-com bubble and surpassed the 10,000 mark in June 2020.