What is the Nasdaq 100?

The Nasdaq 100 is a stock market index that tracks 100 of the largest non-financial companies listed on the Nasdaq Stock Exchange. It is market capitalization-weighted, meaning companies with higher total market values exert more influence on the index performance. The index includes industry leaders from sectors such as software, biotechnology, hardware, and retail. To qualify for inclusion, a company must be listed on the Nasdaq, meet strict liquidity requirements, and maintain an average daily trading volume of at least 200,000 shares. Financial companies, such as commercial banks or investment firms, are excluded from the index. The composition is reviewed annually in December, though adjustments can occur if a company undergoes a merger or fails to meet listing standards. Investors often track the Nasdaq 100 to gauge the performance of the technology sector, as tech firms typically represent over 50% of its total weight. Popular exchange-traded funds, such as the Invesco QQQ Trust, allow investors to gain exposure to the entire index through a single security. Trading financial instruments involves significant risk, and capital loss is possible. Past performance does not guarantee future results.