The Nasdaq index, also known as the Nasdaq Composite, is a stock market index that includes the stocks of all companies listed on the Nasdaq stock exchange. The index is a market capitalization-weighted index, which means that the companies with the highest market capitalization have a greater impact on the index’s performance.
The Nasdaq Composite is composed of over 3,000 companies, with a total market capitalization of over $17 trillion. The companies listed on the Nasdaq exchange are primarily technology and biotech companies, although the exchange also includes companies from other sectors such as consumer services, healthcare, finance, and transportation.
To better understand the composition of the Nasdaq index, it can be divided into several sectors:
- Technology
This sector makes up the largest component of the Nasdaq Composite, accounting for over 40% of the index. Technology companies listed on the exchange include giants such as Apple, Microsoft, Amazon, and Alphabet (Google), as well as many smaller tech companies.
- Healthcare
The healthcare sector is the second-largest component of the Nasdaq Composite, accounting for around 15% of the index. The sector includes pharmaceutical, biotech, and medical device companies, such as Amgen, Gilead Sciences, and Biogen.
- Consumer Services
The consumer services sector is another significant component of the Nasdaq Composite, accounting for around 10% of the index. This sector includes companies that provide consumer-focused services, such as Amazon, Netflix, and Booking Holdings (formerly Priceline).
- Finance
The finance sector accounts for around 8% of the Nasdaq Composite and includes companies such as American Express, Discover Financial Services, and Nasdaq Inc.
- Industrials
The industrials sector accounts for around 7% of the Nasdaq Composite and includes companies such as Tesla, FedEx, and Delta Air Lines.
- Consumer Goods
The consumer goods sector accounts for around 6% of the Nasdaq Composite and includes companies such as PepsiCo, Costco Wholesale, and Starbucks.
- Basic Materials
The basic materials sector accounts for around 2% of the Nasdaq Composite and includes companies such as Albemarle and Dow Inc.
- Energy
The energy sector accounts for less than 1% of the Nasdaq Composite and includes companies such as Clean Energy Fuels Corp and First Solar.
Overall, the Nasdaq Composite is a diverse index that includes companies from a range of sectors. However, the dominance of technology companies in the index means that the performance of the Nasdaq Composite is heavily influenced by the performance of the tech sector. Investors looking to invest in the Nasdaq Composite should therefore pay close attention to the performance of tech stocks on the exchange.