Contents

  1. Nasdaq Composite Index
  2. Understanding the Nasdaq Composite Index
  3. Nasdaq Composite Index Methodology
  4. Nasdaq Composite Index Market Performance 
  5. Conclusion

Nasdaq Composite Index

The Nasdaq Composite Index is a request capitalization- weighted index of morer than 3,700 stocks listed on the Nasdaq stock exchange. As a broad Index heavily weighted toward the important technology sector, the Nasdaq Composite Index has come chief of fiscal requests reports.

  • The Nasdaq Composite Index is an index of 3,700 stocks, weighted by request capitalization.
  • The technology sector accounts for just over half the Index, further than three times the Index weight of any other request sector.
  • Five mega-cap companies reckoned for further than 40 of Index weight, led by AppleInc.( AAPL) at 12.25% as of March 31, 2022

Understanding the Nasdaq Composite Index

The Nasdaq Composite Index includes all equity securities listed on the Nasdaq Stock Market, including common stocks, ordinary shares, American depositary bills (ADRs), units of real estate investment trusts (REITs), and publicly traded partnership, as well as tracking stocks, not eligible for addition are the securities of unrestricted- end finances, exchange-traded finances (ETFs), favored shares, rights, clearances, convertible debenture securities, or other derivations.  The Nasdaq Composite includes the stocks of companies headquartered abroad, in discrepancy with the S&P 500 Index and the Dow Jones Industrial Average, the two other most constantly cited request marks.

Nasdaq Composite Index Methodology

The Nasdaq Composite Index uses a request capitalization weighting methodology. The Index’s value is calculated by casting the request capitalization of the Index factors grounded on the stock’s current price. This aggregate is also acclimated to a constant Index divisor. The Index was launched on Feb. 5, 1971, with an Index value of 100. The Index is calculated constantly throughout the trading day, and its value circulated formerly per second from 9.30a.m. to 5.16 p.m. ET. The ending value of the Index’s may change up until 5.15p.m. ET as a result of corrections to the last reported price for Index factors. Two performances of the Nasdaq Composite Index have calculated a price return Index and a total return Index. The total return Index assumes the reinvestment of cash tips distributed by companies included in the Index. Changes in the share price as a result of commercial conduct similar to stock splits, stock tips, or derivatives are tallied on the action’s-date. Changes in total shares outstanding following transformations, stock repurchases, secondary immolations, or accessions are generally reflected on the night before the action’s effective date.  Eligibility conditions for the Index are reviewed throughout the time. A security that doesn’t meet the eligibility conditions can be removed at any time, generally at its last trade price.

Nasdaq Composite Index Market Performance 

The Nasdaq Composite Index produced an annualized return of 15.4 over the 10 times through April 28, 2022, according to Morningstar. Its 9.1 % decline in Q1 2022 was the Nasdaq Composite’s worst since the14.2% loss in Q1 2020 as the COVID- 19 epidemic struck. The Nasdaq’s 12 drop in April 2022 was its worst since the 17.4% declines in October 2008 at the height of the global fiscal extremity.

The Nasdaq Composite met the common description for a bear request in mid-March of 2022 by dropping further than 20 from the Jan. 3, 2022 peak. From there the Index saw a strong relief rally that roughly halved its losses by the launch of April, and also gave back all those earnings over the coming month.  Because the Nasdaq Composite is dominated by the historically unpredictable technology sector, Index performance tends to be more unpredictable than that of the S&P 500 or the Dow Industrial. 

Conclusion

The Nasdaq Composite Index rose to elevation thanks to the rapid-fire growth of the most successful companies with Nasdaq- listed stocks, including Microsoft and more lately Apple and Alphabet.  The wise side of similar long-term success in an Index grounded on request capitalization is that the Nasdaq Composite is veritably top-heavy. The top five companies (and six stocks including both traded classes of Alphabet’s shares) account for further than 40 of the Nasdaq Composite’s Index weight.  also, high-growth stocks current in the Index tends to be more economically sensitive and more unpredictable as a result. When the request does well, the Nasdaq Composite can be a name it gained 43.6 in 2020 despite a rough March, after a 35.2 swell in 2019. When the going gets rough, you get its 40.5 loss in 2008 — or the first four months of 2022.