The NASDAQ-100 Index is a benchmark index that represents the performance of 100 of the largest non-financial companies listed on the NASDAQ stock market. Established in January 1985, the index is renowned for its heavy emphasis on technology companies, although it also includes firms from various other sectors such as consumer services, healthcare, and industrials.

The NASDAQ-100 is a modified market capitalization-weighted index. This means that companies with larger market capitalizations have a greater impact on the index’s performance, but the weights are adjusted to comply with specific rules to prevent any single company from having too much influence. The index includes well-known companies like Apple, Microsoft, Amazon, Alphabet (Google), and Facebook (Meta Platforms), reflecting the dominance of tech giants in today’s economy.

To be eligible for inclusion in the NASDAQ-100, companies must meet several criteria, including being listed exclusively on the NASDAQ Stock Market, having a minimum average daily trading volume, and being publicly reported for at least two years. The selection process ensures that only the most significant and actively traded companies are included.

The NASDAQ-100 is rebalanced annually in December, with adjustments made to reflect changes in market capitalization and to ensure compliance with index rules. This rebalancing process may also involve replacing companies that no longer meet the criteria with new ones that do. Periodic reviews throughout the year ensure that the index remains a relevant and accurate representation of the market.

The NASDAQ-100 is widely followed by investors, analysts, and fund managers as a key indicator of the performance of the technology sector and the broader market. It serves as the basis for various financial products, including exchange-traded funds (ETFs) and derivatives, making it a crucial tool for market participants.