What is the NASDAQ?

The NASDAQ (National Association of Securities Dealers Automated Quotations) is an electronic stock exchange that specialises in shares of technology and biotech companies.

Founded in 1971 by the National Association of Securities Dealers (NASD), the NASDAQ allowed investors to trade shares on a transparent, computerised electronic marketplace, a model that quickly replaced traditional methods of share dealing.

The NASDAQ now lists more companies (3100 in total), has more trading volume (2 billion shares per day), and deals with more initial public offerings (1,044 since 2000) than any other American stock exchange.

NASDAQ’s innovative approach to trading attracted companies that emerged from the technology boom of the 1980s/90s. By 2013, the NASDAQ’s market capitalization i.e the value of the shares of the companies listed on the NASDAQ index, was around $4,582 billion, second only to the New York Stock Exchange, and includes Facebook, Apple, Google, Microsoft, Oracle, Amazon, Intel and Amgen amongst its listed stocks.

Due to the index’s close ties with the technology sector, the dotcom boom and economic bust of the late 90s are reflected by the NASDAQ’s trading level for that period.

In July 1995, the NASDAQ Composite index reached the 1,000 mark for the first time, fuelled by the positive market expectation for companies such as AOL and Netscape and rose to 5,132 just five years later. By 2002, the NASDAQ was trading around 1,000 once again.

NASDAQ COMPOSITE & THE FINANCIAL CRISIS

The NASDAQ started the fourth quarter of 2007 on a high, hitting 2,861 on October 31st, its highest level since January 2001.

However, in early 2008 increased energy prices and the looming threat of recession saw the NASDAQ fall to 2,300, a drop of 20% on the preceding quarter.

When Lehman Brothers collapsed in September 2008, the NASDAQ slumped another 200 points to below 2,000, its biggest decline since the end of the tech bubble of the 1990s.

The following year the NASDAQ Composite hit a six-year low of 1,265 before recovering as the U.S. Federal Reserve introduced its policy of quantitative easing.

NASDAQ COMPOSITE TOP 10 – DOTCOM TO PRESENT