How is Nasdaq Composite Index Constructed?

What is Nasdaq Composite Index?

The Nasdaq Composite Index combines almost all the stocks listed on the NASDAQ Stock Exchange and depicts the performance of the stock market as a whole. This index is based on the market capitalization of all the stocks listed on the exchange. This market cap-weighted index comprises more than 3000 stocks that are listed on the exchange. It is one of the largest indexes which covers the biggest technology sector composed of both domestic and international companies. The Nasdaq Composite Index is a largely observed stock index and is the main component in the reports of the financial markets. This index is cited along with the S&P 500 and the Dow Jones Industrial Average....

Nasdaq Composite Index Methodology

1. Launched On: In 1971, on 5th February, the Nasdaq Composite Index was launched....

Nasdaq Composite Index Composition

As of October 31, 2023, Nasdaq Composite comprised 3473 stocks across 11 ICB industry groups. The following table shows the percentage wise sector breakdown under the Nasdaq Composite....

Nasdaq Composite Index Market Performance

1. By the year end 2023, Nasdaq Composite Index provided an annual return of 26.80% compared to the year 2022 of -33.10% of annual returns....

What does the Nasdaq Composite Measure?

1. Listed Stocks: The Nasdaq Composite Index measures the performance of the more than 3000 listed securities in the Nasdaq Stock Exchange....

How is Nasdaq Composite Index Constructed?

The Nasdaq Composite Index is constructed based on the weights of the market-capitalization of the listed companies in the index. This depicts that the index value is largely influenced by the top largest companies of the world whose market capitalization is huge. Hence, this index is one of the most largely watched in the world....

How to Invest in a Nasdaq Index?

Direct investing into the Nasdaq Compoisite Index is not possible. Rather, one can invest in exchange traded funds or mutual funds which can actually track the performance of the index with very low cost. These funds are composed of the same shares with the same weights that matches with the index’s performance. For example,...

What Types of Companies are in the Nasdaq Composite Index?

The Nasdaq Composite Index cover the largest technology sector of the world. Around 56.75% comprise of the tech based companies such as Apple, Microsoft, Meta, Amazon and Google covering the topmost in the list. However, other industries also complement the index such as consumer discretionary which accounts for 18.13% as of December 2023. Followed by healthcare sector comprising around 7.41%. Few of the financial companies for example T. Rowe Price are included in the index. Some of companies in the different categories are as follows:...

Frequently Asked Questions (FAQs)

1. What are the benefits of index investing?...