What is NASDAQ and Why It Shakes Up The Global Economy?

What is NASDAQ? It is a New York-based American stock exchange. After NYSE (New York Stock Exchange), it is the world’s second-largest stock exchange.

1. The Brief History Of NASDAQ

In 1971, NASDAQ introduced a computerized trading system that enables fast and transparent trading, becoming the world’s first electronic stock market. It quickly attracted technology companies such as Apple, Amazon, Google, Microsoft, Oracle, Intel, and others to list for public trading.

What is NASDAQ (NDX100) today? It is where most of the tech stocks are traded, including the giants mentioned above, like Apple, Microsoft, Google, Meta, Amazon, and Tesla. It has branches in Canada, China, Japan, and Dubai.

What makes this index unique is that throughout its history, it has been based exclusively on telephone and computer networks. The security and transparency of transactions are made safe through advanced algorithms. These algorithms make it possible for NASDAQ to move some $4 billion globally daily.

2. NASDAQ Composite and NASDAQ 100: Understanding Basics

NASDAQ is a modified market capitalization-weighted index that prioritizes companies with larger market capitalizations. The top 10 NASDAQ Composite stocks make for almost half of the index’s performance.

According to NASDAQ.com, the top 10 most heavily weighed NASDAQ Composite securities as of November 23, 2022, were:

The index functions are an umbrella term that refers to the NASDAQ Composite and NASDAQ 100.

The difference is that NASDAQ Composite Index lists all NASDAQ domestic and international stocks listed on the NASDAQ Stock Market, some 3,700 stocks in total. On the other hand, NASDAQ 100, a large-cap growth index, is limited only to the top 100 U.S. and international companies.

The companies that appear on NASDAQ 100 are graded by market capitalization. This provides traders with an overview of the collective price movements of index’s largest companies, particularly in the technology sector.

3. NASDAQ Breakdown by Industry & Most Heavily Weighed Securities

Since its inception, NASDAQ has been historically considered to be primarily a tech exchange. As of November 23, 2022, the NASDAQ Composite Index looks as follows:

technology – 49.15%

consumer discretionary – 18.03%

health care – 9.65%

financials – 5.20%

industrials – 6.10%

oil and gas – 1.02%

utilities – 0.91%

telecommunications – 3.94%

consumer staples – 3.63%

energy – 1.48%

real estate – 1.18%

utilities 1.11%

basic materials: 0.54%

4. Why Is NASDAQ So Important?

As time goes on, it’s becoming more and more apparent that the tech industry will continue to shape the entire world’s economy. The world’s leading tech index, NASDAQ, correlates directly to tech stock prices.

With companies like Tesla, META, Microsoft, and Apple continuing to push global GDP growth, NASDAQ’s value and role in the global economy can be expected to continue growing along with them.

NASDAQ Composite Historical Price in USD (Source: finance.yahoo.com).

5. Where Can I Trade NASDAQ Composite and NASDAQ 100?

The quickest way to trade or invest in both NASDAQ stocks is by installing the SimpleFX app. Unlike most trading apps, SimpleFX enables you to start trading without unnecessary delays.

You can trade NASDAQ stocks and other financial instruments, including crypto, precious metals, commodities, or Forex. Additionally, when trading on SimpleFX, you’re fully anonymous and free from commission fees.

Try SimpleFX for free today.