The Nasdaq 100 is one of the most heavily traded indices in the world. It includes the largest US and international companies from various industries and is thus regarded as a vital indicator of the global market’s status.
In this article, you will find more about this index, its history, member companies, how to trade it, and so on.
The Nasdaq 100 (abbreviated from the National Association of Security Dealers Automated Quotation) is a market-cap-weighted index comprised of 100 major US and international companies from a wide range of industries represented on the NASDAQ stock exchange. Apple, Google, Microsoft, and other technology companies are some of the most well-known examples.
This is why the Nasdaq 100 (or NAS100, NDX100) is often referred to as the US Tech-100 index.
Since its inception in 1985, the US tech 100, or the Nasdaq 100, has been determined using a weighted market capitalisation system, featuring companies spanning technology from retail to healthcare, but not financial businesses such as commercial and investment banks.
The exchange-traded fund PowerShares QQQ Trust tracks the Nasdaq 100 index (QQQ).
The term “Nasdaq” was initially an acronym for the National Association of Securities Dealers Automated Quotations. The National Association of Securities Dealers (NASD), today known as the Financial Industry Regulatory Authority (FINRA), was founded in 1971.
The Nasdaq stock exchange became the world’s first electronic stock exchange on February 8, 1971. Merely, it was only a “quotation system,” with no mechanism to perform electronic trades.
The NASDAQ Stock Market eventually assumed over most major trades formerly executed through the over-the-counter (OTC) trading system, but many securities are still traded in this manner. Even as late as 1987, the Nasdaq exchange was still referred to as “OTC” in media reports and in Standard & Poor’s Corporation’s monthly Stock Guides (stock guides and procedures).
It evolved into a stock market when trade and volume reporting and automated trading systems were added. In 1981, Nasdaq traded 37% of the 21 billion shares traded in the US securities markets. By 1991, Nasdaq’s market share had grown to 46%.
The Nasdaq Stock Market and the London Stock Exchange joined the first intercontinental capital market linkage in 1992. It was the first stock market in the United States to trade online in 1998, with the famous slogan “the stock market for the next hundred years.” During the dot-com bubble, the Nasdaq Stock Market attracted many companies.
The NASDAQ Composite, which has been in operation since its inception, is its primary index. The QQQ exchange-traded fund tracks the large-cap NASDAQ-100 index, which debuted in 1985, alongside the NASDAQ Financial-100 Index, which tracks the top 100 companies by market capitalisation.
The NASDAQ Composite stock market index peaked on March 10, 2000, at 5,132.52, but fell to 3,227 by April 17 and 78% in the next 30 months.
FINRA sold its Nasdaq stake in a series of sales in 2000 and 2001. Nasdaq Inc. went public on July 2, 2002, through an initial public offering. The Nasdaq Stock Market’s status was converted from stock market to licenced national securities exchange in 2006. It merged with OMX in 2007, a leading Nordic exchange operator, to extend its global footprint and alter its name to the NASDAQ OMX Group.
To qualify for the listing on the exchange:
Following the announcement of NYSE Euronext’s merger with Deutsche Börse in February 2011, speculation grew that NASDAQ OMX and Intercontinental Exchange (ICE) may launch their own bid for NYSE. NASDAQ OMX may look at the American exchange’s cash equities business, while ICE may be interested in acquiring the American exchange’s derivatives business.
During that time,
“The market capitalisation of NYSE Euronext was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion.”
Late in the month, Nasdaq was reportedly considering asking ICE or the Chicago Mercantile Exchange to join in what would almost probably have to be an $11-12 billion counterbid if it proceeded ahead.
In December 2005, NASDAQ paid $1.9 billion for Instinet, keeping the Inet ECN but selling the agency brokerage business to Silver Lake Partners and Instinet management.
The European Association of Securities Dealers Automatic Quotation System (EASDAQ) was founded as a European equivalent to the Nasdaq Stock market. In 2001, NASDAQ purchased it and renamed it NASDAQ Europe. As a result of the dot-com bubble crash in 2003, operations were halted. In 2007, NASDAQ Europe was revived as Equiduct before being acquired by Börse Berlin later that year.
On the evening of the United Nations Conference on Sustainable Development (Rio+20), Nasdaq OMX became a launching member of the United Nations Sustainable Stock Exchanges Initiative on June 18, 2012.
Adena Friedman, the chief operating officer, was promoted to CEO in November 2016, becoming the first woman to lead a significant exchange in the United States.
Nasdaq earned $272 million in listing-related income in 2016.
The SEC ruled in October 2018 that the New York Stock Exchange and Nasdaq failed to justify the continued price increases when selling market data.
In response to Executive Order 13959, NASDAQ announced in December 2020 that it would strip four Chinese companies from its indexes.
Like many other major indices, the Nasdaq 100 is calculated using the market capitalisation of its constituent companies. This implies that large corporations significantly affect the index price more than small businesses. To calculate the NAS100, find the total value of the index share weight of all 102 constituent stocks, multiply this by each share closing price, and divide by an integral index divisor.
The Invesco QQQ exchange-traded fund controls the NDX100. This supervisory body conducts a quarterly review of the index performance to balance it by adding or relying on companies from the Nasdaq composition based on their market cap value.
As previously mentioned, the Nasdaq 100 index includes 102 stocks of 100 domestic and international actively traded companies from various spheres, including transportation (Tesla), services (Booking.com), healthcare (Moderna Inc.), and others. However, being a Tech-100 index, its primary concentration is on the largest technologically-oriented companies such as Microsoft, Intel, Zoom Video Communication, etc. The top 5 Nasdaq stocks are globally referred to as “FAANG”.
The top ten stock companies by weight on the NAS100 as of February 2022 are:
In August 2018, Apple became the first publicly traded company in the United States to reach a $1 trillion market cap. After two years, in August 2020, it surpassed the $2 trillion barrier; this year, in June, it briefly surpassed the $3 trillion level during trading hours.
Apple reported revenue of $274.51 billion in the fiscal year 2020 and $365.82 billion in the fiscal year 2021. (October 2020 – September 2021). The company reported $304.18 billion in revenue during the nine months of FY2022 (October 2021 – June 2022).
In the fiscal year 2021, Apple spent 6% of its net sales on research & development.
Microsoft, led by CEO Satya Nadella, has been working on a new vision for a
“mobile-first, cloud-first, data-powered future.”
Microsoft’s revenue in FY2022 (July 2021 – June 2022) was $198.3 billion, up 18% from $168.08 billion in FY2021. Its operating income increased by 19% to $83.4 billion. Cloud computing has recently been a critical growth engine for the company.
Azure has quadrupled its global market share from 10% in 2014 to 22% in 2022 through R&D activities, initiatives, and collaborations. Microsoft Cloud topped $25 billion in quarterly revenue for the first time in Q4 FY2022, up 28% and 33% in constant currency. Since 1994, Microsoft has acquired around 227 companies. MSFT has made significant acquisitions in recent years to help strengthen its cloud services.
Alphabet is a conglomerate of businesses, the largest of which is Google. Earnings are reported under three categories: Google Services, Google Cloud, and all non-Google businesses combined as Other Bets. Other Bets feature earlier-stage technologies far from Google’s primary business.
Google has increased its efforts in recent years to catch up with the leaders in Cloud computing. Much progress has been made, and Google Cloud now ranks third with a 10% market share, trailing only Amazon AWS and Microsoft Azure. Alphabet reported revenue of $257.64 billion in FY2021 (January 2021 – December 2021), up from $182.53 billion in FY2020.
Google Cloud hit the $6 billion quarterly revenue record for the first time in Q2 FY2022. Overall, the revenue of $69.7 billion was reported, up 13% versus last year or 16% on a constant currency basis.
“We think that a basic measure of our success will be the shareholder value we build over time,” the company stated.
“This value will be directly proportional to our ability to extend and maintain our present market leadership.”
While this is an excerpt from Amazon’s shareholder letter from 1997, it is still relevant today. Amazon is the uncontested leader in e-commerce in the United States, with a 39.5% market share in 2022. The e-commerce market in the US is predicted to surpass $1 trillion for the first time in 2022.
Minimum deposit for forex - Not what you expect — 2023In addition to e-commerce, Amazon continues to dominate the Cloud market. Amazon Web Services (AWS) presently controls 33% of the Cloud market. Amazon’s net sales climbed 22% to $469.8 billion in FY2021 (January 2021 – December 2021), compared to $386.1 billion in 2020.
Tesla, founded in 2003, is nearly synonymous with electric vehicles. According to Morgan Stanley data from July, the company controls 60.9% of the US BEV market. Tesla’s revenue increased by 71%, from $31.53 billion in the fiscal year 2020 to $53.82 billion in the fiscal year 2021. (January 2021 – December 2021).
Tesla reported total revenue of $16.9 billion in Q2 FY2022, up 42% year on year, due to more excellent car deliveries, higher average selling price (ASP), and growth in other business areas.
Tesla designs and manufactures not just all-electric automobiles but also endlessly scalable sustainable energy generating and storage systems. In 2021, the global fleet of Tesla automobiles, energy storage, and solar panels saved its customers 8.4 million metric tons of CO2e emissions.
Facebook’s name was changed to Meta in October 2021. Since its inception in 2004, Facebook has changed how people connect, and the name change reflects the company’s goal.
“In our DNA, we develop technology to bring people together,” Mark Zuckerberg said in a letter. Like social networking before it, the metaverse is the next frontier in linking people.”
The company emphasises Augmented Reality (AR) and Virtual Reality (VR), and it introduced a new moniker for its AR/VR team in August 2020—Reality Labs.
Meta expanded reporting on two operational segments in Q4 FY2021: Family of Apps (FoA) and Reality Labs. Meta’s revenue in FY2021 (January 2021 – December 2021) was $117.93 billion, up from $85.96 billion in FY2020. Facebook, Instagram, Messenger, WhatsApp, and other services are included in FoA. Reality Labs comprises consumer devices, software, and augmented and virtual reality content.
NVIDIA has been a spearheader in the field of accelerated computing. The GPU, invented by the company in 1999, fueled the expansion of the PC gaming market, revolutionised computer graphics, and ushered in the era of contemporary AI. NVIDIA is now a full-stack computing company with data-center-scale capabilities transforming the industry.
The company’s revenue in FY2022 (February 2021 – January 2022) was $26.92 billion, up from $16.67 billion in FY2021. NVIDIA’s earnings report highlights four major segments: gaming, data centres, professional visualisation, and automobiles. NVIDIA reported its Q2 FY2023 profits, with revenue of $6.70 billion, up 3% year on year but down 19% from the previous quarter.
“NVIDIA has good products and a strong position in large and expanding markets.” “As we negotiate these obstacles, we remain focused on the once-in-a-generation chance to reimagine computing for the AI era,” said Jensen Huang, NVIDIA’s founder, and CEO.
PepsiCo was founded in 1965. Its products are now consumed in over 200 countries and territories worldwide. PepsiCo’s product portfolio offers a diverse range of enjoyable foods and beverages with anticipated annual sales of more than $1 billion.
PepsiCo’s net revenue in FY2021 was $79 billion (January 2021 – December 2021). PepsiCo’s portfolio includes Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, and SodaStream. During Q2 FY2022, the company reported net revenue of $20.22 billion. PepsiCo joined the Nasdaq-100 Index in July 2018.
Costco Wholesale is a multibillion-dollar global retailer. Currently, the company operates 834 warehouses, including 575 in the US and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two in France and China, and one in Iceland.
Costco also has e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia. Its revenue in FY2021 (September 2020 – August 2021) was $195.93 billion, up from $166.76 billion in FY2020. The company’s reported net sales of $205.19 billion for the forty-eight weeks ending July 31, 2022, of the ongoing FY2022, a 16.4% increase from $176.30 billion the previous year.
Cisco (CSCO), Qualcomm (QCOM), Intel (INTC), Micron (MU), Adobe (ADBE), Advanced Micro Devices (AMD), Gilead (GILD), Regeneron (REGN), Vertex (VRTX), Amgen (AMGN), Netflix (NFLX), and Starbucks are among the other significant firms in the index (SBUX).
A company must be listed on the Nasdaq Global Select Market or the Nasdaq Global Market to be included in the Nasdaq 100 index. Common stocks, ordinary shares, ADRs, and tracking stocks are all eligible for security categories.
Companies that trade on the Nasdaq must also have an average daily volume of 200,000 shares, file quarterly and yearly reports, be publicly traded for at least three months, and be free of bankruptcy proceedings.
Companies are evaluated quarterly and added or deleted based on market capitalisation.
Investors may trade the Nasdaq 100 index CFD in a variety of ways. Here are some of the most prevalent.
Through a single trade, you may have exposure to NAS100 firms. CFD trading enables investors to open larger positions without depositing significant capital. However, it is critical to understand that profits and losses are calculated on the total value, implying both higher potential returns and losses.
ETFs are traded as a single instrument yet represent a basket of constituent index securities. Two ETFs represent the Nasdaq 100: Invesco QQQ (QQQ) and the Invesco Nasdaq 100 ETF (QQQM).
Nasdaq 100 CFDs futures allow investors to trade contracts on the NAS100 at a set price and date in the future. They are efficient instruments with tight spreads, high liquidity, robust hedging, etc.
The Nasdaq 100 can be influenced by a variety of factors.
The weight assigned to each Nasdaq100 company influences how the individual share price moves the overall index. The index is a weighted collection of share prices; generally, rising share prices increase the index’s value, while falling share prices decrease it. It is important to remember that company shares on the Nasdaq100 are weighted differently depending on their market cap.
For example, if the stock prices of Apple, Microsoft, and Amazon all rise on the same day, their impact on the Nasdaq100 may cause the index’s value to rise because these three companies often carry the greatest weight. Identically, if every other company’s stock falls on the same day, the index’s value may also decrease because it is based on the collective valuation of the underlying shares.
Trader sentiment influences the Nasdaq 100 by altering the underlying shares’ prices. This trader’s attention leads the underlying share prices inside the Nasdaq 100 to possibly shift. Share prices can also rise after the release of quarterly profits or planned growth due to an unexpected outcome.
Major shares or sales of a company might cause the price to move as additional traders become interested. As the underlying assets change, so does the index’s value.
Because the index is weighted, a significant rise or fall in the share price of just one of the top ten companies might move the price of the entire index.
Political events can help or damage business activity. New regulation may have the potential to hold an industry’s capacity to perform business, which may influence the whole index if its component companies are concentrated inside that industry.
For example, suppose the United States government decides that US-based companies may no longer sell their goods to foreign countries. In that case, it may negatively influence share prices throughout an industry.
Many influences influence the Nasdaq 100 and the companies that trade on it. Profit, trader sentiment, economic strength, and other factors all have the potential to move the price of this modified market-capitalisation weighted index.
It is crucial for traders to remain up to date on stock market movements and global news to maintain their finger on the market’s pulse.
When it comes to CFDs on ETFs, they are dealt on the working hours of the NASDAQ stock exchange:
NAS100 futures are primarily traded on CME, whose trading hours are:
Current NASDAQ trading hours in South Africa are from 3.30 pm to 10 pm.
During the last decade, the NASDAQ 100 has outperformed the S&P 500. This, however, was accompanied by increased volatility. It is also worth noting that the S&P 500 provides more diversification.
Despite this, the NASDAQ 100 remains an excellent tool for tracking the performance of the largest technology companies in the United States. Some investors may prefer to buy the index rather than the individual components. The NASDAQ has rules to prevent a single company from obtaining too much weight in the index, which is useful.
The Nasdaq 100, the world’s most well-known technology-focused index, exposes large price movements with high volatility compared to other indices. Furthermore, the index provides strong liquidity, tight spreads, and extended trading hours.
The Nasdaq may be traded via Nasdaq futures and options and exchange-traded funds (ETFs). Reliable platforms also provide more technical information on how to trade the Nasdaq, including strategies, expert tips, and trading hours.
The Nasdaq 100 Index is a basket of the 100 largest and most frequently traded companies in the United States listed on the Nasdaq stock exchange. The index covers companies from various industries except for commercial and investment banks. Retail, biotechnology, industrial, technology, health care, and other non-financial industries are among them.
The DAX 40 is a very popular index trader by traders and is seen is the Nas100 alternative.
The NAS100 is not to be confused with the NASDAQ Composite, an index that includes every stock listed on the NASDAQ exchange.
