Nasdaq is an acronym that originally stood for the National Association of Securities Dealers Automated Quotations. Today, it primarily refers to the Nasdaq Stock Market, a major American stock exchange.
The Nasdaq 100 Index is a stock market index that tracks the performance of the 100 largest, most actively traded non-financial companies listed on the Nasdaq Stock Market. It is a popular benchmark for the performance of large-cap technology and growth companies.
Key characteristics of the Nasdaq 100 Index:
- Focus on Technology and Growth: The index is heavily weighted towards technology companies, but it also includes companies from other sectors such as retail, healthcare, and biotechnology.
- Market Capitalization-Weighted: The index is weighted based on the market capitalization of its constituent companies, meaning that larger companies have a greater influence on the index’s overall performance.
- Excludes Financial Companies: The Nasdaq 100 specifically excludes financial companies, such as banks and insurance companies.
Why is the Nasdaq 100 Index Important?
- Benchmark for Growth Stocks: It serves as a key benchmark for investors seeking exposure to high-growth companies, particularly in the technology sector.
- Investment Opportunities: Investors can gain exposure to the Nasdaq 100 through various investment vehicles, such as exchange-traded funds (ETFs), mutual funds, and futures contracts.
- Indicator of Market Sentiment: The performance of the Nasdaq 100 is closely watched by investors as an indicator of overall market sentiment and the health of the technology sector.
In summary:
The Nasdaq 100 Index is a significant stock market index that provides a concentrated measure of the performance of large, non-financial companies listed on the Nasdaq exchange. Its focus on technology and growth companies makes it a popular choice for investors seeking exposure to this dynamic sector.