What does NASDAQ mean?
NASDAQ stands for the National Association of Securities Dealers Automated Quotations, and it is one of the largest stock exchanges in the world. More than 3,000 listings are used in the NASDAQ Composite, which is a stock market index used by many stock analysts and investors to measure the performance of the stock market.
How many stocks are listed on NASDAQ?
NASDAQ lists stocks of approximately 4,000 companies, including some of the most successful tech stocks like Apple, Microsoft, Alphabet (Google), Intel, Meta (formerly Facebook), Amgen, and Tesla.
NASDAQ vs. Dow Jones and S&P 500
NASDAQ is an exchange like the New York Stock Exchange (NYSE). However, unlike the NYSE, NASDAQ reports the performance of all companies listed on it. The Dow Jones and S&P 500, along with MSCI, are indices that track the performance of specific stocks.
NASDAQ at its peaks and troughs
The NASDAQ Composite has continued to rise steadily since late 2014, consistently reaching new record highs.
NASDAQ crashes
On August 22, 2013, NASDAQ closed all trading from 12:14 PM EST until 3:25 PM EST. The “flash crashes” occurred when one of the NYSE servers faced communication issues with a NASDAQ server. The server provided data regarding stock prices. Despite several attempts, the issue could not be resolved, and the overloaded NASDAQ server collapsed.
NASDAQ bubble
On March 10, 2000, NASDAQ reached a pre-recession peak of 5,048.62, a result of excessive optimism from investors expecting continued price increases in the technology sector. This led to the emergence of a bubble where the prices of any type of technology stocks soared beyond reasonable estimates.
How does NASDAQ affect the economy?
NASDAQ affects the economy in the following ways:
Benefit for small investors: NASDAQ allows small investors to own parts of successful technology companies. Without NASDAQ and other stock exchanges, investments in the American free economy would be limited to large investors and financial institutions.
Markets help savers overcome inflation: Investing in the stock market helps savers overcome inflation in the long term. Generally, stocks provide greater long-term returns than the overall inflation rate. However, they carry greater risks than savings accounts as capital can be lost.
Markets help companies finance growth: Stocks also provide the capital for companies to grow large enough to gain a competitive advantage through economies of scale. Successful, expanding companies need capital to finance their growth. The stock market is a primary source of financing. To raise funds through the public exchange, owners must sell a portion of the company. To do this, they “list the company on the stock market” by offering the company’s shares for sale.
Stock prices indicate how much investors value the company. When stock prices rise, investors believe that profits will improve. Generally, declining stock prices mean that investors have lost confidence in the company’s ability to generate profits.
Stock prices rise during the expansion phase of the business cycle. Since the stock market can indicate investor and consumer confidence, a market crash can destroy economic growth.
Low stock prices mean less wealth for companies, pension funds, and individual investors. As a result, companies may struggle to secure significant funding for operations and expansion.
Source: https://www.thebalancemoney.com/what-does-nasdaq-stand-for-then-and-now-3306242
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