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NASDAQ Stock Exchange

Last updated 25th Nov 2022
Disclosure

Everything is relative, and from the standpoint of stock exchanges, the NASDAQ is a newcomer. When trading began in February 1971, the NASDAQ became the world's first completely electronic stock exchange. Today, it is arguably the largest of the U.S. stock markets.

NASDAQ Stock Market

The NASDAQ exchange consists of around 2,886 listed companies, and has surpassed even the NYSE Euronext in terms of shares traded daily (15.2 million trades per day in November 2020). With its high-tech image, the NASDAQ is home to many prestigious retailers, media, communication, financial institutions, and biotechnology companies. The total market capitalization of the exchange was $18.0 trillion in November 2020.

As is the case with the Dow Jones, the exchange is also home to several important Indices: the NASDAQ 100 Index and the NASDAQ Composite Index.

NASDAQ 100 Index

Launched in January 1985, the NASDAQ 100 Index consists of 100 of the largest non-financial companies listed on the exchange in terms of total market capitalization. The index represents companies across all major industry groups, including computer hardware, retailers, computer software, telecommunications, and biotechnology.

As composed, the NASDAQ 100 is expected to maintain the economic attributes of capitalization-weighting, while providing the investor with diversification. To meet this objective, the components and weightings of the index are reviewed quarterly.

NASDAQ Composite Index

Launched in 1971, the NASDAQ Composite Index is perhaps the broadest based index available today. The Index includes over 3,000 securities, more than most of the other major stock market indices. As was the case with the NASDAQ 100, the Composite is calculated using a market capitalization weighted methodology.

To be included in the Composite, the company must be listed exclusively on the NASDAQ exchange, and have a security type of either:

  • Common Stock
  • Ordinary Shares
  • Tracking Stocks
  • Limited Partnership Interests
  • Shares of Beneficial Interest (SBIs)
  • Real Estate Investment Trusts (REITs), or
  • American Depositary Receipts (ADRs)

Securities excluded from the Index include closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units, and other derivative securities.

Computer Infrastructure

When first assembled in 1971, the NASDAQ computer infrastructure consisted primarily of mainframe computers. As the exchange grew, so did the demands on this infrastructure, and the first wave of change started in 1982. In that year, NASDAQ started using HP NonStop servers for core applications.

The demands on their infrastructure are astounding; to say the least. Today, their vast computer network is capable of handling 1 million real time messages every second. On August 16, 2007 the NASDAQ had its largest trading day ever, as 3.73 billion shares were exchanged.

In March 2005, NASDAQ extended their relationship with HP by purchasing over 500 new processors to improve the exchange's display and trading execution system over a three year period.

Boston Stock Exchange Acquisition

First announced in October 2007, the NASDAQ agreed to acquire the Boston Stock Exchange for $61 million. The acquisition included the BSE Group, as well as the Boston Equities Exchange. On August 29, 2008, the NASDAQ OMX Group completed the transaction.

NASDAQ MarketSite

In step with its high tech image, the NASDAQ houses a state-of-the-art digital studio that transmits live market information to over 175 networks including CNBC, BBC, Bloomberg, and Reuters. Through this network, millions of viewers are able to keep in touch with the latest market developments.

Video Wall

Located in the heart of Times Square, the NASDAQ MarketSite Video Wall is a modern day icon for the electronic market itself. The video wall consists of 96 multimedia screens and measures 47 feet long and 16 feet high.

The wall provides market summaries, charts and graphs, intraday updates, and information on indices.

NASDAQ Holiday Trading Schedule

The following are the holiday schedules for the NASDAQ in the calendar years 2020 and 2021.

NASDAQ 2021 Holiday Schedule

New Year's DayJanuary 1, 2021Martin Luther King, Jr. DayJanuary 18 2021Presidents' DayFebruary 15, 2021Good FridayAril 02, 2021Memorial DayMay 31, 2021Independence DayJuly 5, 2021Labor DaySeptember 6, 2021Thanksgiving DayNovember 25, 2021ChristmasDecember 24, 2021

The NASDAQ will close early (1:00 p.m.) on Friday, November 26, 2021, and Thursday, December 23, 2021.

NASDAQ 2020 Holiday Schedule

New Year's DayJanuary 1, 2020Martin Luther King, Jr. DayJanuary 20, 2020Presidents' DayFebruary 17, 2020Good FridayApril 10, 2020Memorial DayMay 25, 2020Independence DayJuly 3, 2020Labor DaySeptember 7, 2020Thanksgiving DayNovember 26, 2020Christmas (Observed)December 25, 2020

The NASDAQ will close early (1:00 p.m.) on Friday, November 27, 2020, and Thursday, December 24, 2020.

NASDAQ Trading Hours

The NASDAQ trading sessions are between the hours of 9:30 a.m. to 4:00 p.m. Eastern Time; after-hours trading runs from 4:00 p.m. to 6:30 p.m. Eastern Time. The timetable for trading is as follows:

NASDAQ Hours of Operation

Order / Quote Entry07:30Pre-Market Session08:00 - 09:25Pre-Open Session09:25 - 09:29:59Regular Market Hours09:30 - 16:00Post-Market Hours16:00 - 18:30

The operating hours listed above are stated as Eastern Standard Time (EST) = GMT-5 / Eastern Daylight Time (EDT) = GMT-4.

NASDAQ Composite Records

In the table below, there is one trend that stands out from all the rest, and that is the effect of the dot com run up, and the bubble bursting, in the years 1999 and 2000. We'll finish up this article with a quick mention of the dot com bubble since it has a lasting effect on the NASDAQ Composite Index.

NASDAQ Composite Index Records

MilestoneDate Reached1,000July 17, 19952,000July 16, 19983,000November 3, 19994,000December 29, 19995,000March 9, 20006,000April 25, 20177,000January 2, 20188,000August 27, 2018

The above data demonstrates that it took over 24 years for the Composite to hit the 1,000 mark, yet it only took a little over 4 months to rise from 2,000 to the 3,000 mark. That's an average of a 150% increase in the market valuation for over 3,000 stocks in just 4 months!

NASDAQ Bubble

Nearly 20 years ago (1995), the Internet had an estimated 18 million users, and its commercial value was just being recognized. The "Internet economy" was all the rage, and speculators poured money into companies that had yet to show any profits.

In fact, not only didn't these companies realize any earnings, most didn't even have a viable business plan. One of the standout examples is Pets.com which, despite its lack of profitability, managed to reach a market capitalization of over a billion dollars in its IPO.

In early 2000, investors began to realize the dot com was a bubble ready to burst, and panic selling ensued. The stocks of hundreds of dot com companies disappeared overnight, as the NASDAQ Composite lost over 78% of its value in the next two and a half years. The market fell from a record high 5,132.52 in March of 2000 to 1,108.49 in October 2002.


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Moneyzine Editor

Moneyzine Editor