Last Updated on June 20, 2022 by Oddmund Groette
The Nasdaq-100 index is one of the most followed stock indexes around the globe. But what exactly is it?
The Nasdaq-100 is a stock index that tracks 100 of the largest domestic and international non-financial companies listed on the Nasdaq stock exchange based on market capitalization and other factors. It is one of the world’s preeminent large-cap growth indexes.
At the bottom of the article we provide you with several Nasdaq 100 trading strategies.
In this post, we will discuss the following:
- What Is the Nasdaq-100 index?
- What companies and stocks are included in the Nasdaq-100 index?
- When was the Nasdaq-100 index created?
- How is the Nasdaq-100 index calculated?
- Can you buy the Nasdaq-100 index?
- Where can you follow Nasdaq-100 index today?
- Pros and Cons of using the Nasdaq-100 index
- FAQs about the Nasdaq 100 Index
What Is the Nasdaq-100 index?
The Nasdaq-100 is a stock market index that tracks about 100 of the largest non-financial stocks listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index — the weights of stocks in the index are based on their market capitalizations but with certain rules to cap the influence of the largest components.
The index is limited to companies from a single exchange, the Nasdaq exchange, and it does not have any financial companies.
What companies and stocks are included in the Nasdaq-100 index?
As of the time of writing, June 10, 2022, these are the top 5 stocks in the Nasdaq-100 index and their Market Caps:
- Apple Inc. (AAPL): The iPhone maker has a Market Cap of $2.707 trillion.
- Microsoft Corp. (MSFT): The popular PC giant has a Market Cap of $2.311 trillion.
- com, Inc. (AMZN): The e-commerce giant has a Market Cap of $1.427 trillion.
- Tesla, Inc. (TSLA): Tesla’s Market Cap is $902.1 billion.
- Alphabet Inc. Class A (GOOGL): The Market Cap of Alphabet Class A shares is $836.5 billion.
When was the Nasdaq-100 index created?
The Nasdaq-100 index was created in 1985, along with Nasdaq Financial-100, which focuses on solely financial companies. This is why the Nasdaq-100 index does not include any financial companies.
How is the Nasdaq-100 index calculated?
The Nasdaq-100 index is calculated by getting the market capitalizations of its component stocks and then adding them together to get the index’s total market capitalization. Each component stock’s weight is gotten by dividing the stock’s market cap by the index’s total market cap.
Can you buy the Nasdaq-100 index?
No, you cannot directly buy the Nasdaq-100 index, but you can buy its index mutual fund or ETF. A Nasdaq-100 index fund invests in the index’s component stocks and tracks the movement of the index.
Where can you follow Nasdaq-100 index today?
You can follow the index on Nasdaq.com. The market cap of the index and its component stocks are also published regularly on financial websites, such as Bloomberg and Wall Street Journal.
Pros and Cons of using the Nasdaq-100 index
Some of the pros and cons of using the Nasdaq-100 index are as follows.
- It is an easy way to track the health of the tech industry.
- Its historical data can help traders and investors to know how the markets have reacted to certain situations in the past.
- By giving higher weights to stocks with higher market capitalization, the index may be unduly influenced by high-cap stocks.
- The index focuses on top companies, so it doesn’t reflect what happens to small-cap stocks.
FAQs about the Nasdaq 100 index
Compared to other indexes like S&P 500, DAX, FTSE, and the Dow, these FAQs address the unique features of the Nasdaq-100.
What number of stocks are in the index?
At present, the index consists of 102 equity securities issued by 101 of the largest non-financial companies listed on the Nasdaq.
The calculation methodology is based on modified market-cap weighting.
What does the Nasdaq-100 stand for?
It stands for an index of the top 100 stocks listed on the Nasdaq stock exchange.
What is the average return of the Nasdaq-100?
As of 2017, the Nasdaq-100 index has returned about 10.8% annually on average.
Does the Nasdaq-100 pay dividends?
Being an index (not a stock or a fund), the Nasdaq-100 index does not pay dividends.
How often do Nasdaq-100 components change?
The components of the index are rebalanced on a quarterly basis using their weighting and other relevant factors.
What does the Nasdaq-100 measure?
The Nasdaq-100 measures the market cap of the top 100 nonfinancial stocks listed on the Nasdaq stock exchange.
What is the current Nasdaq-100 record high?
As of June 10, 2022, the Nasdaq-100 index’s record high is 16764.86, which was reached on November 22, 2021.
What is the highest VIX has ever been?
According to the TradngView chart, the highest the VIX has ever reached is 85.47. This happened on March 18, 2020, following concerns about the COVID-19 pandemic.
Nasdaq trading strategies (NQ and QQQ free trading systems):
- RSI QQQ (RSI mean reversion trading strategy QQQ)
- Monday/Tuesday trade in Nasdaq
- Nasdaq (QQQ) mean reversion