Nasdaq Composite

The Nasdaq Composite is a stock market index of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market, meaning that it has over 3,000 components. It is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies. Since both U.S. and non-U.S. companies are listed on the NASDAQ stock market, the index is not exclusively a U.S. index.

History

Dot com boom

On July 17, 1995, the index closed above the 1,000 mark for the first time. On March 10, 2000, the index peaked at an intra-day high of 5,132.52, and closed at an all-time high of 5,048.62. The decline from this peak signaled the beginning of the dot-com bubble burst.

The index declined to half its value within a year, and finally hit the bottom of the bear market trend on October 10, 2002 with an intra-day low of 1,108.49. While the index gradually recovered since then, it did not trade for more than half of its peak value until May 2007. The 2000s brought a mix of pessimistic news stemming from the Early 2000s recession, the September 11 attacks and the impending Afghan War along with the 2003 invasion of Iraq.

Financial crisis

The index opened the fourth quarter of 2007 with new 80-month highs, fueled by future possible takeovers and mergers, healthy earnings reports particularly in the tech sector, and moderate inflationary readings; closing above the 2,800 point mark on October 9, 2007. The intraday level of 2,861.51 on October 31, 2007 was the highest point reached on the index since January 24, 2001.

While increased anxiety over high energy prices and the possibility of recession dropped the NASDAQ well into correction territory in early 2008, a bear market was finally recognized on February 6 when the NASDAQ closed below the 2,300 level, about 20% below the recent highs. On September 29, 2008, the NASDAQ dropped nearly 200 points, the most since the tech bubble burst, losing 9.14% (third largest in history) to fall beneath the 2,000 level. On October 13, 2008, the NASDAQ recorded a gain of nearly 200 points (more than 11%), continuing record levels of market volatility.

Extending a two-month slide, the index recorded fresh 5½-year lows on November 20, 2008, closing at 1,316.12 near its intraday low, almost 55% below its cyclical bull market peak. On March 9, 2009, the composite hit an intra-day low of 1,265.52 extending losses surrounding the financial crisis which began in late 2008.

Towards the beginning of December 2010, the composite made a staggering 101% rebound from its March lows towards the 2,550 level, amid hope that the Late-2000s Recession, the United States housing bubble and the Global financial crisis of 2008–2009 were easing and possibly coming to an end. However it still ended the decade considerably below where it started the decade. Since its inception, the index has grown to include over 3,000 companies.

Criteria

To be eligible for inclusion in the Composite, a security's U.S. listing must be exclusively on the NASDAQ Stock Market (unless the security was dually listed on another U.S. market prior to 2004 and has continuously maintained such listing), and have a security type of either:
- American Depositary Receipts (ADRs)
- Common Stock
- Limited Partnership Interests
- Ordinary Shares
- Real Estate Investment Trusts (REITs)
- Shares of Beneficial Interest (SBIs)
- Tracking Stocks

Closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities are not included. If at any time a component security no longer meets the above criteria, the security becomes ineligible for inclusion in the Composite Index and is removed.

Investing

Investing in the NASDAQ Composite Index is currently made accessible through an exchange-traded fund issued by fund manager Fidelity Investments. Introduced on October 1, 2003, the ETF (NASDAQ: ONEQ) attempts to match the overall performance of the index. It is not nearly as popular as the "cubes" (NASDAQ: QQQ) which track the NASDAQ-100.

See also

• NYSE Composite
• Value Line Composite Index

References

• NASDAQ Composite Index

External links

• Yahoo! Finance page for ^IXIC
• Bloomberg page for CCMP:IND
• Nasdaq Market Indices
• NASDAQ Composite Index List
• March 10, 2000 record high