Il Nasdaq, the technology stock index of the American Stock Exchange, turns 53 today. Founded in New York on February 4, 1971, its official debut on the market occurred four days later, on Monday 8 February.
The headquarters are in Times Square, in the financial heart of the Big Apple. The name Nasdaq is an acronym meaning National Association of Securities Dealers Automated Quotation (National Association of Securities Dealers with Automated Quotation). It is the first fully electronic stock market in the world, based on computer communications.
The Nasdaq is the American stock market index represents mainly the technology companies (but also includes companies from other sectors). They are part of the index all big tech most famous and among the most capitalized companies in the world such as Microsoft, Apple, Google, Facebook, Nvidia, Amazon, Tesla, Intel, Netflix, Cisco and Yahoo. It is the busiest stock trading place in the United States by volume, and ranks second on the list of stock exchanges by market capitalization of stocks traded, behind the New York Stock Exchange. As of February 2024, the Nasdaq has a market capitalization of 32,29 billion of dollars.
The performance of the NASDAQ is measured by various indices, mainly including the Nasdaq Composite Index and the Nasdq-100.
The world's first electronic stock market
On February 8, 1971, the Nasdaq launched as the world's first electronic stock market. Initially, it was only a “quotation system” and did not allow electronic transactions. In practice, computers were employed only to disclose pricing information, while orders were transmitted via telephone until 1987. Telematic transmission of orders was implemented at the end of 1987.
Over the years, the Nasdaq has grown into a complete stock market, integrating commercial reports and automated trading systems. In 1981, it handled 37% of the US markets' 21 billion shares, increasing to 46% in 1991. In 1998, it was the first stock market in the US to introduce online trading.
From the initial value to the record of 16 thousand points
The Nasdaq started 53 years ago with a initial value of 100 points, reaching an all-time high of 5.132 points on 10 March 2000, at the height of the New Economy boom, before the subsequent bursting of the Dot-com speculative bubble, which brought the index back close to 1000 points.
After the volatility of the first years of the new millennium, in the following years we observed first a stabilization and then a growth which led the index to exceed 10.000 points during 2020. Once the collapse due to Covid was overcome, the Nasdaq returned to break records and has been on the rise ever since.
Il historical maximum of the Nasdaq index was reached on December 21, 2021, when has reached 16.459 points. Currently, the index is around 15.609 points, according to data updated at the beginning of the session on Friday 7 February 2024.
The Nasdaq indices
The Nasdaq has several indexes that reflect various areas of the economy. Currently, there are more than fifteen indices, which are based on stocks traded in the electronic system. The main ones are:
- Nasdaq Composite includes all companies listed on the NASDAQ, with over 5000 in total, valued by considering the total number of shares multiplied by the market value of a single share. The basket includes not only ordinary shares but also ADRs, minority interests, REITs and other special securities. Listed companies must regularly submit annual financial statements audited by an auditor. Closed-end fund units, convertible bonds, ETFs, warrants, rights, derivatives and stocks with special voting rights are excluded from the Nasdaq Composite.
- Nasdaq-100 includes the 100 largest companies by capitalization listed on the NASDAQ, excluding those in the financial sector, representing sectors such as technology, telecommunications, biotechnology and trading. It is based on market capitalization and uses an algorithm to diversify sector weights. Launched in 1985 with a base of 250 points, it was split in 1994 due to growth. It undergoes quarterly reviews which may change the titles and weightings, taking place in March, June, September and December. To be included, stocks must have a daily trading volume of at least 200.000 pieces, a minimum market capitalization and must have been listed for at least two years. As of 2021, 57% of companies in the Nasdaq-100 were technology companies.
Other Nasdaq indices include:
- Bank Index: for companies in the banking sector
- Biotechnology Index: for medical and pharmaceutical companies
- Computer Index: For companies that develop computer software and hardware
- Financial Index: for companies in the financial sector, excluding banks and insurance companies
- Industrial Index: for industrial companies
- Insurance Index: for insurance companies
- Telecommunications Index: for telecommunications companies
- Health Care Index for the healthcare sector
- Technology Index for the technology sector
