NASDAQ Stock Exchange

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 2,877 listed companies, and has surpassed even the NYSE Euronext in terms of shares traded daily (6.7 million trades per day in July 2016).  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 $7.5 trillion in July 2016.

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 2016 and 2017.

NASDAQ 2017 Holiday Schedule

New Year's Day January 2, 2017
Martin Luther King, Jr. Day January 16, 2017
Presidents' Day February 20, 2017
Good Friday April 14, 2017
Memorial Day May 29, 2017
Independence Day July 4, 2017
Labor Day September 4, 2017
Thanksgiving Day November 23, 2017
Christmas December 25, 2017

The NASDAQ will close early (1:00 p.m.) on Friday, November 24, 2017, and Friday, December 22, 2017.

NASDAQ 2016 Holiday Schedule

New Year's Day January 1, 2016
Martin Luther King, Jr. Day January 18, 2016
Presidents' Day February 15, 2016
Good Friday March 25, 2016
Memorial Day May 30, 2016
Independence Day July 4, 2016
Labor Day September 5, 2016
Thanksgiving Day November 24, 2016
Christmas (Observed) December 26, 2016

The NYSE Euronext will close early (1:00 p.m.) on Friday, November 25, 2016.

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 Entry 07:30
Pre-Market Session 08:00 - 09:25
Pre-Open Session 09:25 - 09:29:59
Regular Market Hours 09:30 - 16:00
Post-Market Hours 16:00 - 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

Milestone Date Reached
1,000 July 17, 1995
2,000 July 16, 1998
3,000 November 3, 1999
4,000 December 29, 1999
5,000 March 9, 2000

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.


 About the Author - NASDAQ Stock Exchange (Last Reviewed on September 1, 2016)