The Nasdaq Composite Index is a stock market index that tracks the performance of over 3,000 companies listed on the Nasdaq stock exchange. It is one of the most widely followed and quoted indicators of the U.S. stock market, along with the Dow Jones Industrial Average and the S&P 500 Index.
The Nasdaq Composite Index was created in 1971 as a way to measure the growth and innovation of the technology sector, which was largely represented by the Nasdaq exchange. The index includes companies from various industries, such as software, hardware, biotechnology, telecommunications, retail, and media. However, it is still heavily weighted towards technology stocks, which account for about 40% of the index's market capitalization.
The Nasdaq Composite Index is calculated using a market capitalization-weighted method, which means that each company's share price is multiplied by the number of shares outstanding, and then divided by a divisor that adjusts for stock splits and other changes. The index is updated throughout the trading day and is reported every 15 seconds.
The Nasdaq Composite Index is often used as a benchmark for investors who want to invest in the technology sector or in growth-oriented companies. The index has historically outperformed the broader market in periods of economic expansion and innovation, but has also suffered more severe losses in periods of market downturns and uncertainty. Some of the most well-known companies in the Nasdaq Composite Index are Apple, Microsoft, Amazon, Facebook, and Tesla.