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Nasdaq Composite
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The Nasdaq Composite (ticker symbol ^IXIC)[2] is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. Along with the Dow Jones Industrial Average and S&P 500, it is one of the three most-followed stock market indices in the United States. The composition of the NASDAQ Composite is heavily weighted towards companies in the information technology sector. The Nasdaq-100, which includes 100 of the largest non-financial companies in the Nasdaq Composite, accounts for about 80% of the index weighting of the Nasdaq Composite.[1]

Key Information

The Nasdaq Composite is a capitalization-weighted index; its price is calculated by taking the sum of the products of closing price and index share of all of the securities in the index. The sum is then divided by a divisor which reduces the order of magnitude of the result.[3]

Investing in the Nasdaq Composite

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Index funds that attempt to track the Nasdaq Composite include Fidelity Investments' FNCMX mutual fund[4] and ONEQ[5][6] exchange-traded fund (ETF). Invesco offers the QQQ ETF, which matches the performance of the Nasdaq-100, a different index which tracks 100 of the largest non-financial companies in the Nasdaq Composite and is 90% correlated with the Nasdaq Composite.[7]

Selection criteria

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To be eligible for inclusion in the Nasdaq 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 must be one of the following security types:[3]

Closed-end funds, convertible bonds, exchange-traded funds, preferred stocks, rights, warrants, units and other derivatives are not included in the index. If at any time a component security no longer meets the required criteria, the security is removed from the index.

Performance

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Price history & milestones

[edit]
Main article: Closing milestones of the Nasdaq Composite
Nasdaq Composite 1971–2021, logarithmic scale
The Nasdaq Composite index spiked in the late 1990s and then fell sharply as a result of the dot-com bubble.

The index was launched in 1971, with a starting value of 100.

On July 17, 1995, the index closed above 1,000 for the first time.[8]

Between 1995 and 2000, the peak of the dot-com bubble, the Nasdaq Composite stock market index rose 400%. It reached a price–earnings ratio of 200, dwarfing the peak price–earnings ratio of 80 for the Japanese Nikkei 225 during the Japanese asset price bubble of 1991.[9] In 1999, shares of Qualcomm rose in value by 2,619%, 12 other large-cap stocks each rose over 1,000% in value, and seven additional large-cap stocks each rose over 900% in value. Even though the Nasdaq Composite rose 85.6% and the S&P 500 Index rose 19.5% in 1999, more stocks fell in value than rose in value as investors sold stocks in slower growing companies to invest in Internet stocks.[10]

On March 10, 2000, the index peaked at 5,132.52, but fell 78% from its peak by October 2002.[11]

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.[12] It remained down at least 50% until May 2007.

The index closed above 2,800 on October 9, 2007, and reached an intra-day level of 2,861.51 on October 31, 2007, the highest point reached on the index since January 24, 2001, before falling in the United States bear market of 2007–2009.

By February 6, 2008, the index was trading below 2,300.[13]

On September 15, 2008, bankruptcy of Lehman Brothers led to a 3.6% drop in the index, its worst single-session percentage decline since March 24, 2003.[14]

On September 29, 2008, the index fell nearly 200 points or 9.14% to fall beneath 2,000. Conversely, on October 13, 2008, the index gained nearly 200 points, more than 11%.

On March 9, 2009, the index reached a six-year intra-day low of 1,265.52.[15]

The index closed 2012 at 3,019.51.[16]

On November 26, 2013, the index closed above 4,000 for the first time since September 7, 2000. Although it still stood almost 20% below its all-time highs, the index set a new record annual close of 4,176.59 on December 31, 2013.

On March 2, 2015, the index closed above 5,000 for the first time since March 9, 2000.[17] On April 23, 2015, the index set a new record closing high for the first time in 15 years, though it was still just short of the all-time intraday high set in 2000.[18]

On January 2, 2018, the index crossed 7,000 intraday.[19] By December 24, 2018, the index had plunged to its yearly low at 6,192.[20]

In 2019, the index rose 35.2%, closing for the year at 8,972.60 points.[21]

During the 2020 stock market crash, on March 23, 2020, the index hit a low of 6,860.[22] However, on June 9, 2020, the index traded above 10,000 for the first time.[23] On August 6, 2020, the index reached a new all-time high above 11,000[24] and managed to close for the year at 12,888 points.[25]

In 2021, the index reached the milestones of closing above 13,000 and 14,000 in January and February respectively, and in November it closed above 16,000 for the first time.[26][27][28]

In 2022, the index plunged through the beginning of the year with it reaching an intraday low on June 16 at 10,565.14. It closed the first half of the year down 29.74%, the worst first half of the year in its history.[29]

In 2024, the index surged 28.6%, ending for the year at 19,310.79. It reached a milestone & closed above 20,000 on December 11, 2024. [30][31]

Returns by year

[edit]
Year Index Open Index High Index Low Index Close Index Change Index Return
1971 100.00 114.12 99.68 114.12 +14.12 +14.12%
1972 114.12 135.15 113.65 133.73 +19.61 +17.18%
1973 133.73 136.84 88.67 92.19 −41.54 −31.06%
1974 92.19 96.53 54.87 59.82 −32.37 −35.11%
1975 59.82 88.00 59.82 77.62 +17.80 +29.76%
1976 77.62 97.88 77.06 97.88 +20.26 +26.10%
1977 97.88 105.05 93.66 105.05 +7.17 +7.33%
1978 105.05 139.25 99.09 117.98 +12.93 +12.31%
1979 117.98 151.14 117.84 151.84 +33.86 +28.70%
1980 151.84 206.19 124.09 202.34 +50.50 +33.26%
1981 202.34 223.47 175.03 195.84 −6.50 −3.21%
1982 195.84 240.70 159.14 232.41 +36.57 +18.67%
1983 232.41 286.07 230.59 278.60 +46.19 +19.87%
1984 278.60 287.90 225.30 247.10 −31.50 −11.31%
1985 247.10 325.60 245.80 324.90 +77.80 +31.49%
1986 324.90 384.00 322.10 348.80 +23.90 +7.36%
1987 348.80 456.30 288.50 330.50 −18.30 −5.25%
1988 330.50 397.50 329.00 381.40 +50.90 +15.40%
1989 381.40 487.50 376.90 454.80 +73.40 +19.24%
1990 454.80 470.30 323.00 373.80 −81.00 −17.81%
1991 373.80 586.35 353.00 586.34 +212.54 +56.86%
1992 586.34 676.95 545.95 676.95 +90.91 +15.45%
1993 676.95 791.20 644.71 776.80 +99.85 +14.75%
1994 776.80 800.63 690.95 751.96 −24.84 −3.20%
1995 751.96 1,074.85 751.96 1,052.13 +300.17 +39.92%
1996 1,052.13 1,328.95 977.79 1,291.03 +238.90 +22.71%
1997 1,291.03 1,748.78 1,194.16 1,570.35 +279.32 +21.64%
1998 1,570.35 2,202.63 1,465.61 2,192.69 +622.34 +39.63%
1999 2,192.69 4,090.61 2,192.69 4,069.31 +1,876.62 +85.59%
2000 4,069.31 5,132.52 2,288.16 2,470.52 −1,598.79 −39.29%
2001 2,470.52 2,892.36 1,387.06 1,950.40 −520.12 −21.05%
2002 1,950.40 2,098.88 1,108.49 1,335.51 −614.89 −31.53%
2003 1,335.51 2,015.23 1,253.22 2,003.37 +667.86 +50.01%
2004 2,003.37 2,185.56 1,750.82 2,175.44 +172.07 +8.59%
2005 2,175.44 2,278.16 1,889.83 2,205.32 +29.88 +1.37%
2006 2,205.32 2,470.95 2,012.68 2,415.29 +209.97 +9.52%
2007 2,415.29 2,861.51 2,331.57 2,652.28 +236.99 +9.81%
2008 2,652.28 2,661.50 1,295.48 1,577.03 −1,075.25 −40.54%
2009 1,577.03 2,295.80 1,265.62 2,269.15 +692.12 +43.89%
2010 2,269.15 2,675.26 2,100.17 2,652.87 +383.72 +16.91%
2011 2,652.87 2,878.94 2,298.89 2,605.15 −47.72 −1.80%
2012 2,605.15 3,196.93 2,605.15 3,019.51 +414.36 +15.91%
2013 3,019.51 4,177.73 3,019.51 4,176.59 +1,157.08 +38.32%
2014 4,176.59 4,814.95 4,103.88 4,736.05 +559.46 +13.40%
2015 4,736.05 5,231.94 4,292.14 5,007.41 +271.36 +5.73%
2016 5,007.41 5,487.41 4,209.76 5,383.12 +375.71 +7.50%
2017 5,383.12 7,003.89 5,383.12 6,903.39 +1,520.27 +28.24%
2018 6,903.39 8,109.69 6,192.92 6,635.28 −268.11 −3.88%
2019 6,635.28 9,022.39 6,463.50 8,972.60 +2,337.32 +35.23%
2020 8,972.60 12,899.42 6,860.67 12,888.28 +3,915.68 +43.64%
2021 12,888.28 16,057.44 12,609.16 15,644.97 +2,756.69 +21.39%
2022 15,644.97 15,852.14 10,088.83 10,466.48 -5,178.49 -33.10%
2023 10,466.48 15,150.07 10,265.04 15,011.35 +4,544.87 +43.42%
2024 15,011.35 20,204.58 14,477.57 19,310.79 +4,299.44 +28.64%

Sources:[32][33][34]

References

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Nasdaq Composite

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from Grokipedia
The Nasdaq Composite Index (often abbreviated as Nasdaq Composite) is a market capitalization-weighted that tracks the performance of approximately 3,300 domestic and international common listed exclusively on the , with a particular emphasis on and growth-oriented companies. Launched on February 5, 1971, with a base value of 100, it serves as a broad benchmark for the U.S. equity market, especially the innovative sectors driving economic change, and is updated in real-time during trading hours from 9:30 a.m. to 4:00 p.m. ET. As of February 27, 2026, the most recent closing value of the Nasdaq Composite was 22,878.38 on February 26, 2026, down 1.18% from the previous day. The index is approximately 4.8% below its 52-week high of 24,019.99. The index is not currently in a bear market, as a bear market is typically defined as a 20% or greater decline from recent peaks, and the current decline is only about 4.8%. The index has experienced volatility and declines year-to-date in 2026 primarily due to investor fears of artificial intelligence (AI) disruption. Concerns that AI could negatively impact business models in software, technology, finance, logistics, and other sectors have triggered selloffs in dominant technology stocks. As of mid-February 2026, short-term technical indicators are negative: the index is in a horizontal trend channel, trading below short-term moving averages (5-day at approximately 22,778, 20-day at 23,199), with a 14-day RSI of 38.38 indicating bearish momentum and a falling RSI trend signaling potential downward reversal; support is near 22,080, with resistance at 22,700 (though intraday trading on February 18 has seen the index exceed this level, reaching 22,709.94). Despite these short-term bearish signals, the long-term outlook remains positive, with a rising trend channel, support at 20,000, resistance at 24,000, and overall bullishness despite negative RSI divergence. Established alongside the founding of the Stock Market as the world's first electronic exchange, the index was designed to reflect the dynamism of emerging industries, evolving from its initial focus on over-the-counter securities to encompass a diverse array of sectors today. Its composition includes ordinary shares, American Depositary Receipts (ADRs), and interests, but excludes preferred stocks, exchange-traded funds (ETFs), closed-end funds, and derivative products; eligibility requires at least one day of trading with a Nasdaq Official Closing Price and exclusive listing on the exchange, with no restrictions based on geography, industry, , , or . The index undergoes daily reconstitution and rebalancing at market open, incorporating new listings and removing delisted securities, while s such as stock splits or mergers are adjusted using a method to maintain continuity. Calculated by summing the market capitalizations of its components and dividing by an index divisor to account for adjustments like stock splits, the Nasdaq Composite provides both price return and total return versions, capturing dividends for the latter. Heavily weighted toward technology (approximately 63% as of September 2025), it features dominant holdings such as NVIDIA (around 12% weight), Microsoft (10%), Apple (10%), and Amazon (6%), alongside exposure to consumer discretionary, healthcare, and financials, making it more volatile than broader indices like the S&P 500 due to its growth-stock tilt. Over its history, the index has delivered strong long-term performance, with an annualized return of about 17.2% over the decade ending September 2025, though it has experienced significant drawdowns, including a 78% drop during the dot-com bust of 2000–2002 and a 35% drop in 2022 amid rising interest rates. Investors cannot buy the index directly but can gain exposure through ETFs like the Fidelity Nasdaq Composite Index ETF or mutual funds tracking its performance, underscoring its role as a key indicator of technological innovation and market sentiment.

Overview

Definition and Purpose

The Nasdaq Composite is a market capitalization-weighted comprising over 3,500 common equities listed exclusively on the , encompassing nearly all domestic and international common stocks, American Depositary Receipts (ADRs), and tracking stocks traded on the exchange. It excludes certain securities such as preferred stocks, exchange-traded funds (ETFs), and closed-end funds to focus on core equity performance. The primary purpose of the Nasdaq Composite is to serve as a comprehensive benchmark for the overall performance of companies listed on the exchange, with a particular emphasis on , , and growth-oriented sectors that drive in the U.S. . By providing a broad indicator of market health in these dynamic areas, it enables investors, analysts, and policymakers to gauge trends in high-growth industries and the broader equity landscape. The index was launched with a base value of 100 on February 5, 1971, set relative to the common stocks listed on the at that time, allowing for historical tracking of market . As of November 2025, the total represented by the Nasdaq Composite approximates $39.0 trillion, underscoring its significant scale within global financial markets.

Key Characteristics

The Composite Index encompasses all common listed exclusively on the Nasdaq Stock Market, including both domestic U.S. companies and select international firms that maintain their primary U.S. listing there, while deliberately excluding preferred stocks, exchange-traded funds (ETFs), bonds, and such as options and futures. This broad inclusion captures over 3,500 securities as of late 2025, providing a comprehensive snapshot of the exchange's equity market without restrictions based on , sector, or thresholds beyond basic listing requirements. By focusing solely on common stocks, the index reflects the performance of operating companies traded on Nasdaq, emphasizing its role as a tech-heavy benchmark for market trends. In terms of sectoral composition, the Nasdaq Composite remains heavily weighted toward the sector, which accounts for approximately 64% of the index's total weight as of November 7, 2025, driven by the dominance of , software, and internet-related firms. Significant allocations also exist in consumer discretionary (17%), healthcare (6%), and industrials (3%), underscoring the index's exposure to growth-oriented industries beyond pure technology, though non-tech sectors collectively represent less than 40% of the overall weighting. This distribution highlights the index's sensitivity to innovation-driven sectors, with smaller contributions from financials (3%), communication services (2%), and utilities (1%). The index employs a market capitalization-weighted , wherein each constituent's influence is proportional to its total market value, allowing mega-cap leaders such as Apple, , and —each exceeding 5-10% of the index weight individually—to exert substantial sway over overall performance. This approach amplifies the impact of high-valuation giants, potentially magnifying volatility during sector-specific rallies or downturns. The Nasdaq Composite is calculated and disseminated in real-time throughout Nasdaq's regular trading hours, from 9:30 a.m. to 5:16 p.m. Eastern Time, enabling intraday monitoring by investors and analysts.

History

Launch and Early Development

The Nasdaq Composite Index was launched on February 5, 1971, by the National Association of Securities Dealers (NASD), the predecessor to Nasdaq, Inc., as the world's first automated quotation system designed specifically for over-the-counter (OTC) stocks. This innovation addressed longstanding inefficiencies in the OTC market, where trading previously relied on manual "pink sheet" publications with limited transparency and accessibility. The index began with a base value of 100 and encompassed approximately 2,500 domestic common stocks listed on the nascent Nasdaq Stock Market, emphasizing electronic dissemination of real-time quotes to democratize trading beyond the traditional floor-based New York Stock Exchange (NYSE). Established under the oversight of the U.S. Securities and Exchange Commission (SEC), the system aimed to enhance market efficiency and investor protection by providing standardized, timely pricing information for a broad range of securities, many of which were smaller or growth-oriented companies ineligible for NYSE listing. In its early years, the Nasdaq Composite focused on facilitating automated trading for these OTC securities, marking a pivotal shift toward that reduced reliance on physical trading floors and intermediaries. The index's composition reflected the OTC market's diversity, including early listings from innovative firms in and , which helped establish Nasdaq's reputation as a hub for emerging industries. By enabling multiple market makers to compete via computer networks, the system lowered transaction costs and broadened participation, with initial trading volumes reaching nearly two billion shares in its first year across about 500 market makers nationwide. The index experienced steady growth throughout the 1970s, rising from its initial value of 100 to over 200 by the end of 1980, fueled by economic expansion and the increasing prominence of technology stocks. This period saw key listings such as Intel Corporation, which went public in October 1971 and exemplified the wave of and firms driving market interest. Under SEC regulation, ongoing refinements to quotation levels and reporting requirements further solidified the index's role in promoting transparency, laying the groundwork for Nasdaq's evolution into a major global exchange while maintaining its OTC roots.

Major Events and Crises

In 1998, amid global financial turmoil including the Russian debt default and the collapse of Long-Term Capital Management, the Nasdaq Composite experienced a sharp correction, falling to a low of 1,344 in October. The index then recovered strongly in 1999 due to Federal Reserve interest rate cuts in late 1998 and renewed investor confidence, surging over 85% and surpassing prior highs to reach over 5,000 by March 2000. The Nasdaq Composite has been profoundly shaped by several key crises, reflecting its heavy weighting in and growth stocks, which often amplify market volatility during periods of economic uncertainty or sector-specific exuberance. The represented a defining crisis for the index in the late and early , driven by speculative investments in internet-based companies. The index reached an intraday peak of 5,132.52 on , 2000, fueled by irrational enthusiasm for unprofitable tech startups and easy access to capital. This peak was followed by a severe collapse as investor sentiment shifted, revealing overvaluations and unsustainable business models; the plummeted 78% to a low of 1,114.11 by October 9, 2002, erasing trillions in market value and leading to widespread bankruptcies among dot-com firms. The burst not only decimated tech sector jobs but also prompted regulatory reforms, including stricter accounting standards under the Sarbanes-Oxley Act of 2002. The 2008 global financial crisis further tested the index's resilience, as the subprime mortgage meltdown triggered a broad freeze and . Starting from a high of 2,859.12 on October 31, 2007, the Nasdaq experienced a sharp 40% decline in 2008 alone amid bank failures and shortages, bottoming out at 1,268.64 on March 9, 2009. This downturn was exacerbated by the index's exposure to and cyclical tech stocks, contributing to a loss of over $5 trillion in U.S. equity value overall. Government interventions, such as the and , facilitated a gradual recovery, with the index regaining its pre-crisis levels by 2015. The COVID-19 pandemic induced another rapid shock in early 2020, as global lockdowns and economic shutdowns sparked panic selling. The index fell approximately 30% from its February 2020 highs, reaching a low of 6,860.67 on March 23, 2020, amid fears of prolonged disruption to supply chains and consumer spending. However, unprecedented fiscal stimulus, including the CARES Act, and a surge in demand for digital services propelled a swift rebound; by August 2021, the Nasdaq had surpassed 16,000, setting new records as tech giants benefited from remote work trends and e-commerce growth. In , the index entered a bear market amid persistent and aggressive interest rate hikes to combat it, declining 33.1% for the year and bottoming at 10,213.29 in December, marking its worst annual performance since and highlighting vulnerabilities in high-valuation growth stocks to monetary tightening. More recently, the Nasdaq achieved a positive milestone amid ongoing AI-driven innovation, crossing the 20,000 threshold for the first time on December 11, 2024, closing at 20,034.89. This surge was propelled by strong performances in semiconductors and sectors, bolstered by favorable data and expectations of continued rate cuts. However, early 2025 saw another crisis as the index crashed starting April 2, 2025, triggered by new U.S. policies under President , leading to increased global trade tensions and a sharp decline of over 20% from its late-2024 peak amid fears of economic slowdown; the index recovered amid policy adjustments and sector resilience, reaching 22,900.59 by November 14, 2025.

Composition and Methodology

Selection Criteria

The Nasdaq Composite Index includes all domestic and international common-type exclusively listed on the Stock Exchange, encompassing American Depositary Receipts (ADRs), common , limited partnership interests, ordinary shares, and shares or units of beneficial interest. Eligible securities must have traded for at least one day on the Stock Market and possess a Nasdaq Official Closing Price. There are no further eligibility thresholds related to , , float, geography, industry, or sector. To qualify for listing on —and thus potential inclusion in the index—companies must satisfy the exchange's initial listing standards, which differ across three tiers: Nasdaq Global Select Market, Nasdaq Global Market, and Nasdaq Capital Market. For instance, under the Nasdaq Global Market's equity standard, issuers need at least $15 million in stockholders' equity, a two-year operating history, 400 round lot holders (shares in multiples of 100), 1.1 million unrestricted publicly held shares with a of at least $8 million, and a $4 minimum bid price. Similar but scaled requirements apply to other tiers, such as $5 million equity and 300 round lot holders for the Nasdaq Capital Market. Certain types are explicitly excluded from the index, including closed-end funds, exchange-traded funds (ETFs), , debentures, , warrants, units, and other securities. The index undergoes daily reconstitution and rebalancing effective at market open, incorporating additions of newly eligible -listed securities and automatic removals of those that no longer qualify, such as upon delisting or merger. continuously monitors listed companies for ongoing compliance with standards like minimum equity, , and bid price; noncompliance triggers a determination process, potentially leading to delisting and immediate index exclusion.

Calculation and Weighting

The Nasdaq Composite is a market capitalization-weighted index, meaning its value reflects the total market capitalization of its constituents relative to a base period. The index value is calculated using the formula: Index Value=Aggregate Index Market ValueIndex Divisor\text{Index Value} = \frac{\text{Aggregate Index Market Value}}{\text{Index Divisor}} where the aggregate index market value is the sum of each constituent security's market value, computed as the product of its total shares outstanding and its current last sale price. The index divisor is a scaling factor adjusted to maintain continuity when corporate actions or index composition changes occur, ensuring the index level is not artificially distorted. This methodology was established with a base value of 100 on February 5, 1971. The for each constituent is determined by multiplying the total —updated daily to reflect current figures—by the security's price, without adjustments for free float. The aggregate thus represents the full investable value across all eligible Nasdaq-listed securities meeting the index's criteria, such as common , REITs, and ADRs. Unlike some specialized indices, the Composite uses total to capture the broad market representation of the exchange. Daily adjustments incorporate corporate actions to preserve the index's integrity. These include stock splits, stock dividends, spin-offs, and rights issuances, which are applied on the ex-date by modifying share counts or prices accordingly; special cash dividends are evaluated case-by-case for potential divisor adjustments. New listings are added and delistings removed as they occur, with updates processed in the evening prior to the effective date or as soon as practicable. The index divisor is recalculated post-market close to account for these events, preventing discontinuities in the index level. Rebalancing occurs continuously rather than on a fixed schedule, aligning with the dynamic nature of the market. Index values are computed intraday, updated once per second from 9:30:01 a.m. to 5:16:00 p.m. ET, using real-time last sale prices, with the official closing value finalized by 5:15:00 p.m. ET. This frequent recalculation ensures the index accurately tracks market movements throughout trading hours.

Investing in the Nasdaq Composite

Investment Vehicles

Investors can gain exposure to the Nasdaq Composite through index-tracking mutual funds, which aim to replicate the performance of the index by holding a representative sample or all of its components. A prominent example is the NASDAQ Composite (FNCMX), which invests at least 80% of its assets in the common stocks included in the Nasdaq Composite and maintains a net of 0.29% as of June 2025. These funds provide broad access to over 3,000 Nasdaq-listed securities, including large-, mid-, and small-cap companies, and are suitable for long-term investors seeking diversified equity exposure. Exchange-traded funds (ETFs) offer another accessible way to track the Nasdaq Composite, trading like stocks on exchanges with intraday liquidity. The Fidelity Nasdaq Composite Index ETF (ONEQ) seeks to replicate the index using statistical sampling techniques, investing at least 80% of its assets in common stocks included in the Nasdaq Composite, and features a low expense ratio of 0.21% as of November 2025. It tracks the full Nasdaq Composite Index (over 3,000 stocks), giving broader exposure than QQQM's top-100 focus. For exposure to a subset of the index, the Invesco QQQ Trust (QQQ) ETF tracks the Nasdaq-100, which comprises the 100 largest non-financial companies on the Nasdaq, providing concentrated growth-oriented access with high trading volume. Additional investment vehicles include derivatives for more sophisticated strategies. While direct futures on the full Nasdaq Composite are not currently available, E-mini Nasdaq-100 futures traded on the CME Group allow investors to speculate on or hedge against movements in a key subset of the index, with contract sizes scaled for broader participation. Options on ETFs like QQQ enable leveraged bets or protective positions, with active trading across various strike prices and expirations. Leveraged and inverse products, such as ProShares Ultra QQQ (QLD) for 2x daily long exposure or ProShares Short QQQ (PSQ) for -1x inverse performance relative to the Nasdaq-100, cater to advanced traders seeking amplified returns or downside protection, though they carry higher risks and are typically designed for short-term use. These investment vehicles are widely available through standard brokerage accounts, including those offered by major platforms like , Charles Schwab, and , often with no transaction fees for eligible funds and ETFs. Low expense ratios, such as ONEQ's 0.21%, enhance cost efficiency for retail and institutional investors alike, making Nasdaq Composite exposure straightforward via taxable, retirement, or advisory accounts.

Strategies and Risks

One common strategy for investing in the Nasdaq Composite is the buy-and-hold approach, which provides long-term exposure to growth-oriented companies, particularly in technology and innovation sectors, through full replication exchange-traded funds (ETFs) that mirror the index's performance. This method allows investors to benefit from the index's diversified basket of over 3,500 stocks while capturing potential appreciation from high-growth firms without frequent trading. For instance, ETFs such as the Fidelity Nasdaq Composite ETF (ONEQ) enable broad access to the index's composition, emphasizing sustained compounding over market cycles. Another tactical strategy involves sector rotation, leveraging the Nasdaq Composite's heavy tilt toward stocks—comprising approximately 63% of the index as of September 2025—to allocate capital during periods of and booms, while balancing with diversification into other sectors like discretionary and financials. Investors may increase exposure to the index when indicators signal growth phases, such as rising corporate earnings in tech, then rotate out toward more defensive assets during contractions to mitigate drawdowns. This approach requires monitoring economic cycles but can enhance returns by capitalizing on the index's sensitivity to technological advancements. Investing in the Nasdaq Composite carries notable risks, including elevated volatility due to its beta exceeding 1 relative to the , making it more susceptible to market swings than broader benchmarks. The index's market-cap weighting leads to significant concentration in top holdings, with the largest 10 companies—such as , , and Apple—accounting for approximately 61% of the total weight as of September 2025, amplifying the impact of any adverse events affecting these mega-cap tech firms. Additionally, the index is highly sensitive to changes, as higher rates can pressure valuations by increasing borrowing costs and discounting future earnings, while regulatory shifts in the sector, including antitrust scrutiny on dominant players, pose further uncertainties. Key considerations for incorporating the Nasdaq Composite into portfolios include the tax efficiency of tracking ETFs, which minimize capital gains distributions through in-kind redemptions and low turnover compared to mutual funds. Minimum investment thresholds are typically low, often limited to the cost of a single ETF share (around $20–$50), making it accessible for retail investors. Portfolios using the index should incorporate regular rebalancing—such as quarterly or annually—to maintain desired allocations and control risk, especially given the index's growth bias.

Performance

Historical Price Milestones

The Nasdaq Composite Index achieved its first major milestone by closing above 1,000 points on July 17, 1995, amid a surge in technology stocks during the mid-1990s bull market. This marked a significant growth from its initial value of 100 set at launch in 1971, reflecting increasing investor enthusiasm for the burgeoning tech sector. The index reached its first peak during the , closing at a record high of 5,048.62 on March 10, 2000, driven by speculative fervor around internet-related companies. Following the bubble's burst, the Nasdaq experienced a severe decline, bottoming out at a closing low of 1,114.11 on October 9, 2002, representing an approximately 78% drop from its 2000 peak and erasing much of the era's gains. After years of recovery, the Nasdaq Composite closed above 10,000 for the first time on June 10, 2020, at 10,020.35, fueled by a post-pandemic rebound in and remote-work enablers like video conferencing and platforms. The index continued its ascent, crossing 15,000 with a close of 15,019.80 on August 24, 2021, supported by strong performances from leading tech firms amid economic reopening and trends. In late , the hit another high, closing at 16,057.44 on November 19, , its first close above 16,000, as investor optimism around growth stocks persisted despite emerging inflationary pressures. The index then faced volatility from the pandemic's early stages, reaching a closing low of 6,860.67 on March 23, 2020, after a rapid sell-off triggered by global lockdowns and economic uncertainty. In 2024, the closed above 20,000 for the first time with a close of 20,034.89 on December 11, 2024, propelled by hype surrounding AI technologies and strong earnings from and leaders. It closed the year 2024 at 19,310.79 on December 31. In 2025, the index continued to rise, closing above 21,000 for the first time on July 23, 2025, at 21,020.02, and above 22,000 on September 11, 2025, at 22,043.07. As of November 14, 2025, it closed at 22,900.59. On February 12, 2026, the NASDAQ Composite Index closed at 22,597.15, down 469.32 points or 2.03% from the previous day. On February 13, 2026, the Nasdaq Composite closed at 22,546.67, down 50.48 points or 0.2% from the previous day. On February 17, 2026, the Nasdaq Composite closed at 22,578.38, up 31.71 points or 0.14% from the previous day. On February 25, 2026, the Nasdaq Composite rose 1.3% during regular trading hours to close at 23,152.08. In after-hours trading, Nasdaq 100 futures declined about 0.4%, indicating a slight decline amid mixed reactions to earnings reports (e.g., Nvidia shares rose on an earnings beat but futures slipped overall due to other stocks like Salesforce declining sharply on disappointing revenue guidance). On February 26, 2026, the Nasdaq Composite closed at 22,878.38, down 1.18% from the previous day. In early 2026, the Nasdaq Composite recorded a negative year-to-date performance as of February 17, 2026, primarily attributable to investor fears of artificial intelligence (AI) disruption. Concerns that AI could negatively impact business models in sectors such as software, technology, finance, logistics, and others triggered a selloff in technology stocks, which dominate the index. During this period, the index exhibited volatility and declines amid worries over AI overinvestment, potential bubbles, and competitive AI advancements, contributing to broader market weakness. As of February 17, 2026, technical analysis indicated short-term negative signals: the index was in a horizontal trend channel and trading below short-term moving averages (5-day at 22,778, 20-day at 23,199), with the 14-day RSI at 38.38 (bearish) and a falling RSI trend signaling potential further downside. Support was near 22,080, and resistance at 22,700. The long-term outlook remained positive, with the index in a rising trend channel, support at 20,000, resistance at 24,000, and an overall bullish stance despite negative RSI divergence.

Annual Returns and Volatility

The Nasdaq Composite has demonstrated substantial variability in its annual performance, characteristic of its heavy weighting toward volatile technology and growth stocks. Representative yearly returns illustrate this fluctuation: in 1980, the index rose 33.88% during an economic recovery phase. The dot-com bubble's peak year of 1999 delivered an extraordinary 85.59% gain, driven by investor enthusiasm for internet-related companies. Conversely, 2000 marked the bubble's burst with a -39.29% decline, while the resulted in a -40.54% drop amid widespread market turmoil. In a more recent example, 2024 saw a 28.64% increase, fueled by advancements in and semiconductors. As of November 2025, the year-to-date return for 2025 is approximately 18.5%. Over its history since inception in 1971, the Nasdaq Composite has provided an approximate annualized price return of 10.5%, reflecting compounded growth from an initial value of 100 to over 22,900 as of 2025. This figure represents historically higher annualized returns compared to broader market indices like the S&P 500, attributable to the index's focus on technology and growth sectors. When accounting for reinvested dividends—estimated at an average yield of about 0.8% annually—the total return rises to roughly 11.2%. These figures underscore the index's potential for long-term appreciation despite periodic setbacks. Volatility remains a defining feature, with the standard deviation of annual returns historically ranging from 25% to 35%, notably higher than the S&P 500's 15% to 20% due to the Nasdaq's sector concentration. This elevated risk is quantified by a historical of approximately 0.5 to 0.7, indicating moderate risk-adjusted performance relative to the . In bull markets, such as the , average annual returns exceeded 20%, propelled by the technology boom; however, major crashes have led to drawdowns surpassing 50%, as seen in the dot-com bust and the 2008 crisis.
YearAnnual Return (%)Context
1980+33.88Economic recovery
1999+85.59 peak
2000-39.29Bubble burst
2008-40.54
2024+28.64AI and tech surge

Significance and Impact

Economic Role

The Nasdaq Composite serves as a key indicator of the health of the innovation-driven segments of the U.S. , particularly , , and high-growth sectors that emphasize (R&D). These sectors, heavily represented in the index, contribute significantly to through , with Nasdaq-listed companies reinvesting substantially in R&D—at rates approximately 1.4 times higher as a percentage of sales compared to the , as seen in companies—which supports productivity gains and broader GDP growth. For instance, the index's performance reflects the vitality of industries that drive advancements in areas like , semiconductors, and healthcare, influencing overall economic output by fostering job creation and technological diffusion across the . As a gauge of market sentiment, surges in the Nasdaq Composite signal strong investor confidence in future economic growth and technological progress, while sharp declines often foreshadow broader downturns. The index's 600% rise from 1995 to its March 2000 peak exemplified exuberant optimism in the internet economy, but its subsequent 78% plunge by October 2002 correlated closely with the 2001 recession, as overvalued tech stocks burst and led to widespread layoffs and reduced investment. This pattern underscores the index's role in anticipating economic cycles, where its volatility amplifies signals about consumer and business spending on innovative ventures. The Nasdaq Composite exerts a global influence as a for U.S. equities, particularly those tied to , with its movements rippling through international markets and informing . Declines or surges in the index can trigger correlated responses in global indices like the FTSE 100 or , affecting cross-border investment flows and trade in tech goods. In 2025, the ongoing has further amplified this influence, with Nasdaq gains driving correlated rises in global tech indices amid heightened reliance on U.S. sectors. Policymakers, including the , monitor tech valuations reflected in the to guide decisions; for example, the Fed raised rates six times between June 1999 and May 2000 to curb the dot-com overheating, demonstrating responsiveness to asset bubbles in innovation sectors. A core contribution of the Nasdaq Composite lies in facilitating capital raising for startups and growth companies through initial public offerings (IPOs), enabling rapid scaling of innovative enterprises. In 2024, Nasdaq welcomed 171 IPOs, including 123 operating companies, raising $22.7 billion and capturing an 81% win rate among eligible U.S. IPOs, which underscores its dominance in channeling funds to emerging tech and biotech firms. This mechanism not only bolsters entrepreneurial activity but also amplifies the index's role in sustaining long-term economic dynamism by converting private into public market liquidity.

Comparisons with Other Indices

The Nasdaq Composite exhibits greater volatility and a stronger growth orientation compared to the , primarily due to its heavier weighting in technology stocks, which comprise approximately 50% of the index as of late 2025, versus about 30-36% in the . This sector concentration drives higher long-term annualized returns for the Nasdaq Composite, averaging around 11% since its in 1971 through 2024, compared to the 's roughly 10% over similar periods, though the Nasdaq experiences larger drawdowns, such as the 78% drop during the dot-com bust versus the 's 49%. In contrast to the (DJIA), the Composite is far broader in scope, encompassing over 3,000 stocks listed exclusively on the Nasdaq exchange, while the DJIA tracks just 30 blue-chip companies, most of which are NYSE-listed and emphasize established industrials and financials. The 's focus on innovative, often smaller-cap tech firms has led to superior performance in the , outperforming the DJIA by more than twofold in cumulative returns from 2020 to mid-2025, fueled by the AI and surge. The Nasdaq Composite differs from the in its inclusivity, capturing all common stocks listed on the —over 3,000 in total, including a significant portion of mid- and small-cap companies—whereas the selects only the 100 largest non-financial issuers for a more concentrated large-cap exposure, as tracked by the popular . This broader composition in the Composite provides greater diversification across company sizes but dilutes the performance impact of top tech giants compared to the 's focused weighting. The Nasdaq Composite maintains a high correlation of approximately 0.9 with the over long periods, reflecting shared exposure to U.S. equities, but this linkage weakens during technology-driven booms, where the has outperformed by 10% or more annually, as seen in 2023-2024 amid AI advancements.

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