The first annual adjustments were made in 1993 in advance of options on the index that would trade at the Chicago Board Options Exchange in 1994. Foreign companies were first admitted to the index in January 1998, but foreign companies had higher standards to meet before they could be added. Those standards were relaxed in 2002, while standards for domestic firms were raised, ensuring that all companies met the same standards.
The all-time highs for the index, set at the height of the dot-com bubble in 2000, stand above 4,700 points, while its recent bear market lows in 2002 occurred below the 900 point level. The NASDAQ-100 closed above the 2,200 point milestone on October 23, 2007 for the first time in over 80 months and reached an intraday high of 2,239.51 on October 31, 2007, the highest reached since February 16, 2001. However, the index corrected below the 2,000 level in early 2008 amid high energy prices and recession fears. Panics centered upon the failure of the investment banking industry, culminating in a loss of more than 10% on September 29, 2008, subsequently plunged the index firmly into bear market territory, more than 30% from the previous cyclical high. Throughout the first part of October 2008, the NASDAQ has continued to move dramatically lower in almost every trading session, with the index closing just above 1,275 on October 9, its lowest since June 30, 2003 and a monthly loss of more than 20%.
NASDAQ-100 is often abbreviated as NDX. Its corresponding futures contracts are traded on the Chicago Mercantile Exchange. The regular futures are denoted by the Reuters Instrument Code ND, and the smaller "e-mini" version uses the code NQ. Both are among the most heavily traded futures at the Chicago Mercantile Exchange.
The NASDAQ-100 Trust Series 1 Exchange-traded fund, sponsored and overseen since March 21, 2007 by Powershares, trades under the ticker . On December 1, 2004, it was moved from the American Stock Exchange where it had the symbol QQQ to the NASDAQ and given the new four letter code QQQQ.
It is sometimes referred to as the "Quad Qs," "Cubes," or simply as "the Qs." In 2000 it was the most actively traded security in the United States, but has since dropped to second place after Standard & Poor's Depositary Receipts. On July 17, 2007, the ETF closed above $50 for the first time since early 2001. After reaching a peak just above $55 in late 2007, the Qs succumbed to a wider financial crisis and trade near $30 as of October 2008.
The NASDAQ has over the years put in place a series of stringent standards for which companies must meet before being included in the index. Those standards include:
Additionally, companies with multiple classes of stock are only allowed to have one class included in the index (usually the largest class in terms of market capitalization).
While the composition of the NASDAQ-100 changes in the case of delisting (such as transferring to another exchange, merging with another company, or declaring bankruptcy, and in a few cases, being delisted by NASDAQ for failing to meet listing requirements), the index is only rebalanced once a year, in December, when NASDAQ reviews its components and makes the appropriate adjustments. All changes, regardless of when it occurs, are publicly announced via press releases at least five business days before the change is scheduled to take place.
There are two tools the NASDAQ uses to determine the market values of companies for the annual review:
Those components that are in the top 100 of all eligible companies at the annual review are retained in the index. Those ranked 101 to 125 are retained only if they were in the top 100 of the previous year's annual review. If they fail to move into the top 100 in the following year's review, they are dropped. Those not ranked in the top 125 are dropped regardless of the previous year's rank.
The companies that are dropped are replaced by those who have the largest market value and are not in the index already. Anticipation of these changes can lead to changes in the stock prices of the affected companies.
The NASDAQ-100 is frequently confused with the Nasdaq Composite Index; the latter index (often referred to simply as "the NASDAQ") includes the stock of every company that is listed on NASDAQ (more than 3,000 all together) and is quoted more frequently than the NASDAQ-100 in popular media.
The NASDAQ-100 is a modified capitalization-weighted average.
The methodology was created in 1998 in advance of the creation the NASDAQ-100 Index Trust, which holds portions of all NASDAQ-100 firms. The only time it is to be rebalanced again is if
In addition to its lack of financial companies, the Nasdaq-100 includes 13 companies incorporated outside the United States. The Dow Jones Industrial Average has never included foreign companies, and the S&P 500 also includes 13 non-U.S. companies (a coincidence - the 13 foreign companies in each index are completely different). As of December, 2007 the countries (excluding the United States) represented in the NASDAQ-100 are;
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