The NASDAQ (National Association of Securities Dealers Automated Quotations) is a major US stock exchange. Founded in 1971, NASDAQ is the second largest stock exchange by market capitalisation in the world, the largest being the NYSE.
The NASDAQ is owned by the NASDAQ OMX Group, which also owns eight other exchanges located in Europe and Scandinavia. Over 2,600 companies are listed on the NASDAQ. These are generally companies that develop and manufacture technnology products - like the NASDAQ itself (NASDAQ:NDAQ), listed on its own market since 2002.
The total market cap of all stocks listed on the NASDAQ was around $6 trillion at the start of 2014. $800 to 900 billion worth of stock is traded monthly.
The NASDAQ stock exchange is different from the NYSE or any other traditional exchange as it incorporates an electronic trading system. Founded relatively recently in stock exchange terms, the NASDAQ has never had a traditional open outcry trading floor. All trades were instead made via telephone in the exchange's early history. In 1987, after the Black Monday crash of 19 October, the exchange switched to the SOES (Small Order Execution System), allowing traders to buy and sell completely electronically. This eliminated the problem of brokers not answering their phones, whether accidentally or intentionally.
The NASDAQ Composite index (NASDAQI:COMPX) is the NASDAQ's main stock index. The Composite is an index of all stocks traded on the NASDAQ and is widely used by those involved in the financial markets as an indicator of the general direction of the US markets, particularly in the area of technology.
The NASDAQ 100 index (NASDAQI:NDX) is an index of the 100 largest non-financial, US-based companies listed on the NASDAQ.
Like their transatlantic cousin, the FTSE 100 (FTSE:UKX), the NASDAQ Composite and 100 are capitalisation weighted indices, meaning their constituent stocks have a greater influence on the value of the index the larger their own market cap. A company valued at $100 million would exert a much greater influence on the index value than a company with a market cap of $1 million. This is different from price weighted indices like the Dow Jones Industrial (DOWI:DJI), where the value of one constituent share, rather than the constituent company's entire market cap, is what determines the level of influence over the index.
Major NASDAQ stocks
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