What is the Nasdaq Composite Index?

Core points

The Nasdaq Index is an index that reflects the changes in the NASDAQ stock market.

The characteristics of Nasdaq include the widest coverage and the largest number of constituent stocks.

The average annual return of the Nasdaq in the past 10 years is much higher than that of the S & P 500 and the Dow.

Detailed explanation of concept

The American stock market, symbolized by Wall Street, is the largest and most well-regulated capital market in the world. The Nasdaq Composite Index is the most influential market index in the American stock market, and it is also the most sensitive nerve in the American economy.

The Nasdaq Composite Index is a stock index that reflects the changes in the Nasdaq stock market, referred to as the Nasdaq. It is calculated on the basis of the common shares of all domestic and foreign listed companies listed on the Nasdaq market. Nasdaq's constituent stocks are mainly composed of fast-growing advanced technology, telecommunications and biological companies. Microsoft Corp, Intel Corp, Amazon.Com Inc and other well-known high-tech companies are all constituent stocks of the Nasdaq.

Exponential characteristics

The broadest coverage: unlike the Dow and S & P 500, Nasdaq stocks are not limited to the United States, but also include Nasdaq-listed companies from other countries around the world, such as BABA, JD.com and other Chinese stocks.

The largest number of constituent stocks: the Nasdaq has more than 3000 stocks, far higher than the S & P 500 and the Dow 30.

Index performance

Since its inception in February 1971, the Nasdaq has risen from an initial value of 100 points to 12888 points at the end of 2020, rising about 128-fold in 50 years, with an average annual return of about 10.1 per cent.

During these 50 years, the Nasdaq experienced the stock market crash after the bursting of the dotcom bubble from 2000 to 2003, and the index once fell from 5000 to 1100. Starting in 2010, the Nasdaq rose about 4.68 times over the 11-year period from 2010 to 2020, with an average annual return of about 17.1%, compared with an average annual return of about 11.7% for the S & P 500 and about 10.3% for the Dow.