Founded in 1971, the NASDAQ is now one of the biggest stock exchanges in the world. It's home to many of the world's best-known technology companies, including Microsoft, Google, Cisco, Intel and Apple. The NASDAQ Composite Index got off to a sluggish start before surging in the 1980s and 1990s. It dropped dramatically in the early 2000s before recovering by the end of the decade.
History
The NASDAQ is short for the National Association of Securities Dealers Automated Quotations. More than 5,000 companies trade on the electronic stock exchange, which was founded as the successor to the over-the-counter system. The exchange itself is owned by the NASDAQ OMX Group, which trades under the symbol NDAQ.
NASDAQ Composite
Closing prices of the NASDAQ are commonly displayed in newspapers and television shows. That number is actually the NASDAQ Composite Index, which measures all the common stocks listed on the NASDAQ Stock Market. The index is market-value weighted, so bigger stocks have a more significant effect on the direction of the index. There is also the NASDAQ 100 index of the exchange's best-known stocks.
Slow Start
The NASDAQ Composite opened at 100 points when the exchange started in 1971. That turned out to be a most inauspicious time for stocks following a huge run-up during the 1960s. High inflation and oil prices sapped the U.S. economy, and stocks languished. At the beginning of 1978, the NASDAQ Composite was still about where it started--around 100.
Bull Roar
After a rough start, the NASDAQ found its footing during the long U.S. bull market that started at the beginning of the 1980s and lasted until the end of the 1990s. The composite first broke 1,000 points in the summer of 1995. Then things really took off. The index, which was hovering around 2,000 at the end of 1998, briefly went past 5,000 by March 2000. The NASDAQ was fueled by the Internet boom, which caused frenzied investors to push "dot-coms" to unsustainable levels.
Wheels Come Off
After March 2000, the NASDAQ came back to earth as quickly as it rose. At the end of 2002, it was nearly back below 1,000. Though the NASDAQ has never again come close to the 5,000 mark, it did nearly hit 3,000 in late 2007 before the stock markets collapsed in the wake of the subprime housing debaucle. It recovered to rise above the 2,000 level in 2009.
