Thursday, 7 February 2013

NASDAQ-100

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The NASDAQ-100 is a stock market index of 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. The companies' weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components. It does not contain financial companies, and includes companies incorporated outside the United States. Both of those factors differentiate it from the Dow Jones Industrial Average, and the exclusion of financial companies distinguishes it from the S&P 500 Index.

Contents

History

NASDAQ-100 Index 1985–2012
The NASDAQ-100 began on January 31, 1985 by the NASDAQ, trying to promote itself in the shadow of the New York Stock Exchange. It did so by creating two separate indices. This particular index, which consists of Industrial, Technology, Retail, Telecommunication, Biotechnology, Health Care, Transportation, Media and Service companies; and the NASDAQ Financial-100, which consists of banking companies, insurance firms, brokerage houses and mortgage companies. By creating these two indices, the NASDAQ hoped that mutual funds, options and futures would correlate and trade in conjunction with them.
The base price of the index was initially set at 250, but when it closed near 800 on December 31, 1993, the base was reset at 125 the following trading day, leaving the halved NASDAQ-100 price below that of the more commonly known NASDAQ Composite. 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 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 the 4,700 level, while its recent bear market lows in 2002 revolving around the Early 2000s Recession, the September 11, 2001 Attacks and the subsequent Afghan War occurred below the 900 point level.
After a gradual 5-year recovery to an intraday high of 2,239.51 on October 31, 2007, the highest reached since February 16, 2001, the index corrected below the 2,000 level in early 2008 amid the Late-2000s Recession, the United States Housing Bubble and the Global Financial Crisis of 2008. Panic focusing on the failure of the investment banking industry culminated in a loss of more than 10% on September 29, 2008, subsequently plunging the index firmly into bear market territory. The NASDAQ-100, with much of the broader market, experienced a Limit Down open on October 24 and reached a 6-year intraday low of 1,018 on November 20, 2008.
By December 2010, the index more than doubled from there to the 2,160 level amid quantitative easing (QE) from the Federal Reserve and optimism that the financial crisis was ending. Following more volatility related to the U.S. federal debt debate in August 2011, the index broke above 2,500 in early February 2012 to reach an intraday peak of 2,800 in late March, surpassed following the announcement of QE3 on September 13, 2012. On September 19, the index reached 2,871.10 and closed at 2,864.03, its highest levels since December 11, 2000, as large-cap tech stocks AAPL and GOOG made all-time closing highs above $700 and $725, respectively.

Investing

The NASDAQ-100 is often abbreviated as NDX in the derivatives markets. 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 exchange.
The NASDAQ-100 Trust Series 1 exchange-traded fund, sponsored and overseen since March 21, 2007 by Invesco through PowerShares, trades under the ticker NASDAQ: QQQ, or "cubes". 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, sometimes called the "quad Qs" by traders. On March 23, 2011, Nasdaq changed its symbol back to QQQ. In 2000, it was the most actively traded security in the United States, and hit an all-time split adjusted intra-day trading high of $120.50 on March 24 of that year, but has since dropped to being within the top five after other stocks and ETFs such as the 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 of $55.07 on October 31, 2007, the Qs succumbed to a wider financial crisis along with a decline in technology spending and plunged towards a November 21, 2008 intra-day low of $25.05. Since then, it has gradually advanced to surpass its 2007 peak, making new 11-3/4 year highs in September 2012 above $70 per share. ProShares issued by ProFunds offer other related NASDAQ-100 ETFs such as the 2x NYSE: QLD, which attempts to match the daily performance of the NASDAQ-100 by 200% and the Inverse 2x NYSE: QID, which attempts to match the inverse daily performance by 200%. For replicating 3x performance; there is the NASDAQ: TQQQ and for Inverse 3x, NASDAQ: SQQQ. ProFunds also issues Inverse Performance NYSE: PSQ for a bearish strategy on the index.

Standards

The NASDAQ has over the years put in place a series of stringent standards that companies must meet before being included in the index. Those standards include the following:
  • Being listed exclusively on NASDAQ in either the Global Select or Global Market tiers.
  • Being publically offered on an established American market for three months.
  • Having average daily volume of 200,000 shares.
  • Being current in regards to quarterly and annual reports.
  • Not being in bankruptcy proceedings.
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).

Yearly rebalancing and re-ranking

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, compares them with those not in the index, re-ranks all eligible companies and makes the appropriate adjustments.
There are two tools the NASDAQ uses to determine the market values of companies for the annual review:
  • Share Prices as of the last trading day in October.
  • Publicly announced share totals as of the last trading day of November.
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.
A company will also be dropped if, at the end of two consecutive months, the component fails to have an index weighting of at least one-tenth of a percent. This can occur at any time.
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.
All changes, regardless of when they occur, are publicly announced via press releases at least five business days before the change is scheduled to take place. The 2012 results of the re-ranking and rebalancing will be announced on December 14 with the changes effective the morning of December 24, coinciding with the expiration of options on December 21.

Differences from NASDAQ Composite index

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 altogether) and is quoted more frequently than the NASDAQ-100 in popular media.
The NASDAQ-100 is a modified capitalization-weighted index. This particular methodology was created in 1998 in advance of the creation the NASDAQ-100 Index Trust, which holds portions of all NASDAQ-100 firms. The new methodology allowed NASDAQ to reduce the influence of the largest companies and to allow for more diversification.
The only time the index is to be rebalanced again is if:
  • One company is worth 24% of the index.
  • Those companies with a weighting of at least 4.5% constitute 48% of the index.

Differences from other indices

In addition to its lack of financial companies, the Nasdaq-100 includes 11 companies incorporated outside the United States. Although the S&P 500 Index includes non-U.S. companies, the Dow Jones Industrial Average has never included foreign companies.
As of December 2012, the Nasdaq-100 has companies incorporated in the following foreign countries:
Additionally, the NASDAQ-100 is also the only index of the three that has a regularly scheduled re-ranking of its index each year (in December), ensuring that the largest non-financial companies on NASDAQ are accurately included.

Related indices

In 2006, NASDAQ created a "farm team" index, the NASDAQ Q-50, representing the next fifty stocks in line to enter the NASDAQ-100. With some exceptions, most stocks that are added to the index come up through the Q-50. In 2011, NASDAQ created the NASDAQ-500 to track the 500 largest stocks on NASDAQ, and the NASDAQ-400, tracking those stocks not included in the NASDAQ-100.
NASDAQ has also divided the 100 into two distinct sub-indices; the NASDAQ-100 Tech follows those components who service the tech sector, and the NASDAQ-100 Ex-Tech, which follows those components that are not considered tech companies. The latter index includes noted E-commerce companies Amazon.com and eBay, which are classified as retailers.

Components

This list is current as prior to the market open on December 24, 2012. An up-to-date list is available in the External Links section. It should be noted that this is an alphabetical list, and not a ranked list
  1. Activision Blizzard (ATVI)
  2. Adobe Systems Incorporated (ADBE)
  3. Akamai Technologies, Inc (AKAM)
  4. Alexion Pharmaceuticals (ALXN)
  5. Altera Corporation (ALTR)
  6. Amazon.com, Inc. (AMZN)
  7. Amgen Inc. (AMGN)
  8. Analog Devices (ADI)
  9. Apple Inc. (AAPL)
  10. Applied Materials, Inc. (AMAT)
  11. Autodesk, Inc. (ADSK)
  12. Automatic Data Processing, Inc. (ADP)
  13. Avago Technologies, Inc. (AVGO)
  14. Baidu.com, Inc. (BIDU)
  15. Bed Bath & Beyond Inc. (BBBY)
  16. Biogen Idec, Inc (BIIB)
  17. BMC Software, Inc. (BMC)
  18. Broadcom Corporation (BRCM)
  19. C. H. Robinson Worldwide, Inc. (CHRW)
  20. CA, Inc. (CA)
  21. Catamaran Corporation (CTRX)
  22. Celgene Corporation (CELG)
  23. Cerner Corporation (CERN)
  24. Check Point Software Technologies Ltd. (CHKP)
  25. Cisco Systems, Inc. (CSCO)
  26. Citrix Systems, Inc. (CTXS)
  27. Cognizant Technology Solutions Corporation (CTSH)
  28. Comcast Corporation (CMCSA)
  29. Costco Wholesale Corporation (COST)
  30. Dell Inc. (DELL)
  31. DENTSPLY International Inc. (XRAY)
  32. DirecTV (DTV)
  33. Discovery Communications (DISCA)
  34. Dollar Tree, Inc. (DLTR)
  35. eBay Inc. (EBAY)
  36. Equinix (EQIX)
  37. Expedia, Inc. (EXPE)
  38. Expeditors International of Washington, Inc. (EXPD)
  39. Express Scripts, Inc. (ESRX)
  40. F5 Networks, Inc. (FFIV)
  41. Facebook, Inc. (FB)
  42. Fastenal Company (FAST)
  43. Fiserv, Inc. (FISV)
  44. Fossil, Inc. (FOSL)
  45. Garmin Ltd. (GRMN)
  46. Gilead Sciences, Inc. (GILD)
  47. Google Inc. (GOOG)
  48. Henry Schein, Inc. (HSIC)
  49. Intel Corporation (INTC)
  50. Intuit, Inc. (INTU)
  51. Intuitive Surgical Inc. (ISRG)
  52. KLA Tencor Corporation (KLAC)
  53. Liberty Global (LBTYA)
  54. Liberty Interactive (LINTA)
  55. Liberty Media (LMCA)
  56. Life Technologies Corporation (LIFE)
  57. Linear Technology Corporation (LLTC)
  58. Mattel, Inc. (MAT)
  59. Maxim Integrated Products (MXIM)
  60. Microchip Technology Incorporated (MCHP)
  61. Micron Technology, Inc. (MU)
  62. Microsoft Corporation (MSFT)
  63. Mondelez (MDLZ)
  64. Monster Beverage (MNST)
  65. Mylan, Inc. (MYL)
  66. NetApp, Inc. (NTAP)
  67. News Corporation (NWSA)
  68. Nuance Communications, Inc. (NUAN)
  69. NVIDIA Corporation (NVDA)
  70. O'Reilly Automotive, Inc. (ORLY)
  71. Oracle Corporation (ORCL)
  72. PACCAR Inc. (PCAR)
  73. Paychex, Inc. (PAYX)
  74. Perrigo Company (PRGO)
  75. Priceline.com, Incorporated (PCLN)
  76. QUALCOMM Incorporated (QCOM)
  77. Randgold Resources, Ltd. (GOLD)
  78. Regeneron Pharmaceuticals (REGN)
  79. Ross Stores Inc. (ROST)
  80. SanDisk Corporation (SNDK)
  81. SBA Communications (SBAC)
  82. Seagate Technology Holdings (STX)
  83. Sears Holdings Corporation (SHLD)
  84. Sigma-Aldrich Corporation (SIAL)
  85. Sirius XM Radio, Inc. (SIRI)
  86. Staples Inc. (SPLS)
  87. Starbucks Corporation (SBUX)
  88. Stericycle, Inc (SRCL)
  89. Symantec Corporation (SYMC)
  90. Texas Instruments, Inc. (TXN)
  91. Verisk Analytics (VRSK)
  92. Vertex Pharmaceuticals (VRTX)
  93. Viacom Inc. (VIAB)
  94. Virgin Media, Inc. (VMED)
  95. Vodafone Group, plc. (VOD)
  96. Western Digital (WDC)
  97. Whole Foods Market, Inc. (WFM)
  98. Wynn Resorts Ltd. (WYNN)
  99. Xilinx, Inc. (XLNX)
  100. Yahoo! Inc. (YHOO)

Changes in 2008

On April 30, 2008 The DirecTV Group (DTV) replaced BEA Systems (BEAS) before the market open.
On May 19, 2008 CA, Inc. (CA) replaced Tellabs (TLAB) before the market open.
On July 21, 2008 FLIR Systems (FLIR) replaced UAL Corporation (UAUA) before the market open.
On November 10, 2008 Seagate Technology (STX) replaced Monster Worldwide (previously MNST, but changed ticker to MWW on November 10, 2008) before the market open.
On December 22, 2008, NASDAQ added the following companies to the NASDAQ-100 index prior to the market open: Automatic Data Processing, First Solar, Life Technologies, Ross Stores Inc., Maxim Integrated Products, Illumina, Inc., Pharmaceutical Product Development, O'Reilly Automotive, Urban Outfitters, J. B. Hunt Transport Services, and Warner Chilcott. The companies that were replaced are: Amylin Pharmaceuticals, Cadence Design Systems, Discovery Communications, Lamar Advertising Company, Leap Wireless International, Level 3 Communications, PetSmart, SanDisk, Sirius XM Radio, Virgin Media, and Whole Foods Market.

Changes in 2009

On January 20, 2009, News Corporation was added to the index, replacing Focus Media Holding, which did not meet the minimum monthly weight requirements.
On July 17, 2009, Cerner Corporation replaced Sun Microsystems after Sun Microsystems was acquired by Oracle.
On October 29, 2009, Priceline.com replaced Juniper Networks, after Juniper transferred to the NYSE.
On December 21, 2009, seven stocks joined the NASDAQ-100 index before the market open: Vodafone, Mattel, BMC Software, Mylan, Qiagen, SanDisk and Virgin Media. These stocks replaced Akamai Technologies, Hansen Natural, IAC/InterActiveCorp, Liberty Global, Pharmaceutical Product Development, Ryanair and Steel Dynamics.

Changes in 2010

On December 20, 2010, seven companies were added to the NASDAQ-100 index prior to the market open: F5 Networks, Akamai Technologies, Netflix, Micron Technology, Whole Foods Market, Ctrip.com International and Dollar Tree. They replaced Cintas, Dish Network, Foster Wheeler. Hologic, J. B. Hunt, Logitech and Patterson Companies. These were the only changes made to the index that year and the fewest since 1997.

Changes in 2011

On April 4, 2011 Alexion Pharmaceuticals (ALXN) replaced Genzyme (GENZ) before the market open. Genzyme was purchased by Sanofi-Aventis.
On May 6, 2011, WFMI (Whole Foods Market) changed its ticker symbol to WFM prior to the market open.
On May 27, 2011 Green Mountain Coffee Roasters (GMCR) replaced Millicom International Cellular prior to the market opening after Millicom (MICC) withdrew its NASDAQ listing.[1]
On July 15, 2011 Sirius XM Radio (SIRI) replaced Cephalon (CEPH) in the index.[2] Cephalon was acquired by Teva Pharmaceutical Industries.
On December 6, 2011 Perrigo (PRGO) joined the index.[3] The company replaced Joy Global (JOYG), who transferred their stock listing to the NYSE. Perrigo had been a member of the index in the 1990s, being dropped in 1996.[4]
On December 19, 2011 five companies joined the NASDAQ-100 index prior to the market open as a result of NASDAQ's annual reranking of the index. They are Avago Technologies (AVGO), Fossil, Inc. (FOSL), Monster Beverage (MNST, formerly known as Hansen Natural, ticker symbol HANS), Nuance Communications (NUAN), and Randgold Resources (GOLD). These companies replaced FLIR Systems (FLIR), Illumina (ILMN), NII Holdings (NIHD), Qiagen (QGEN), and Urban Outfitters (URBN).
On December 20, 2011, ERTS (Electronic Arts) changed its ticker symbol to EA prior to the market open.[5]

Changes in 2012

On January 9, 2012, HANS changed its ticker symbol to MNST (Monster Beverage) prior to the market open.
On April 23, 2012, Texas Instruments (TXN) replaced First Solar (FSLR) prior to the market open.
On May 30, 2012, Viacom (VIAB) became a component of the index prior to the market open. It replaced Teva Pharmaceutical Industries (TEVA), which transferred to the NYSE.
On July 23, 2012, Kraft Foods, Inc. (KFT), now known as Mondelez (MDLZ), became a component of the index prior to the market open, replacing Ctrip (CTRP). Kraft Foods was the fourth component of the NASDAQ-100 to also be included in the Dow Jones Industrial Average, joining Cisco Systems, Intel, and Microsoft, but was removed from the DJIA when it subsequently split into two companies.
On Wednesday December 12, 2012, Facebook Inc. (FB) became part of the NASDAQ-100 Index prior to the market open, replacing Infosys Limited (INFY), which transferred its listing to the NYSE.
Prior to the market open on Monday, December 24, 2012, 20 changes to the index took place. The ten companies joining the index are:
The ten companies being dropped are:

Changes in 2013

References

  1. ^ [1]
  2. ^ Newsroom
  3. ^ NASDAQ Newsroom
  4. ^ http://www.nasdaq.com/indexshares/historical_data.stm
  5. ^ http://investor.ea.com/releasedetail.cfm?ReleaseID=633782

External links

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