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.
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[edit] History
[edit] 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.
[edit] Financial crisis and aftermath
The index opened the fourth quarter of 2007 with new 80-month highs, closing above the 2,800 point mark on October 9, 2007 and reaching an intraday level of 2,861.51 on October 31, 2007, the highest point reached on the index since January 24, 2001.
High energy prices and the possibility of recession dropped the NASDAQ into a bear market in early 2008, which was recognized on February 6 when the NASDAQ closed below the 2,300 level, about 20% below the recent highs. Furthermore, the failure of Lehman Brothers in September brought world financial markets into turmoil. The NASDAQ was no exception, experiencing record levels of market volatility. 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. Conversely, on October 13, 2008, the NASDAQ recorded a gain of nearly 200 points (more than 11%). On March 9, 2009, the composite hit a six-year intra-day low of 1,265.52 before recovering under the influence of Federal Reserve quantitative easing.
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, the NASDAQ closed December 2010 near 2,550, more than double its recent low but still less than half of its all-time highs over a decade earlier. On February 3, 2012, the NASDAQ, powered by the resurgence of tech stocks with proven profitability, such as AAPL, reached its highest levels since the end of the 20th century in December 2000 with a close just above the 2,900 level. Despite a correction in AAPL, the NASDAQ reached another new 11-year closing high of 2,959.85 on February 16 and an intraday high of 2,965.05 on the 21st. The outcome of worries about European debt and the sustainability of tech gains could determine whether the index will breach 3,000 points for the first time in the 21st century.
Since its inception, the index has grown to include over 3,000 companies.
[edit] 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.
[edit] 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.
[edit] See also
[edit] References
[edit] External links
- Yahoo! Finance page for ^IXIC
- Bloomberg page for CCMP:IND
- Nasdaq Market Indices
- NASDAQ Composite Index List
- March 10, 2000 record high
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