The NASDAQ, another very popular term when it comes to investing, is something that is sometimes misunderstood. Much like the S&P 500, the NASDAQ is not an actual thing a person can invest in, it is an index as well, and this index offers the chance to invest in a slice of the market.
The S&P 500, and the NASDAQ for that matter, is often associated with the general health of the economy in the USA, and the global economy on a grader scale of things too. This is a good way to understand the NASDAQ, but it is a little more complicated in comparison with the S&P 500 which is some of the top 500 companies.
But, the NASDAQ is multi-faceted and there are two different things that the term can refer to. First, it is the National Association of Securities Dealers Automated Quotations (NASDAQ) exchange, the first electronic exchange that allowed investors to buy and sell stock on a computerized, speedy, and transparent system, without the need for a physical trading floor.
Then there is the index. This is what people are looking at when they are deciding to invest, this is the index that can either go up — or down. But, when you are investing in the NASDAQ index, you are essentially investing in the companies that trade on the exchange, and most of these companies are technology and internet-related, but there are financial, consumer, biotech, and industrial companies as well. The Nasdaq Composite tracks more than 3,300 stocks.
In comparison to something like the S&P 500 which does not consider different sectors and rather focuses on the size and worth of a company, the NASDAQ is tied to what trades on the exchange and because of its digital bias, it is often a palace for traders interested in technology to track and trace, as well as invest.
NASDAQ Forecast: For 2021 and Beyond
The NASDAQ is not immune to a market crash as was evident by the impact of the Black Thursday panic collapse of 2020. The recovery after to substantial new highs, however, does indicate how healthy the stock market indices’ future is.
Having a look at the NASDAQ 100, the index that tracks the 100 biggest non-financial companies listed on the Nasdaq stock market such as Microsoft, Alphabet, Facebook, and Intel, the index did better than the other popular ones.
Part of the reason for this is because the performance of the NASDAQ 100 Index depends mostly on the performance of the companies it makes up. And, the movements of some companies tend to have more impact on it than others. For example, companies like Microsoft, Apple, and Amazon have a weighting of over 10 percent each while 70 other companies have a weighting of less than 1 percent.
This has helped the NASDAQ leading in 2021 as there has been good news for some of these major companies in this time of market uncertainty such as increased sales on Amazon and Microsoft’s conferencing software Zoom also taking off.
NASDAQ Historical Overview
The NASDAQ has had a great history as it is an index based on technological breakthroughs after it was the first to offer electronic trading, but this happened as far back as 1971.
When the NASDAQ began it had a brief climb to begin with, hitting 816 points before crashing down to less than 300 points in 1974. But, literally since that low the NASDAQ trended upwards all the way to the year 2000, and that trend got very strong during the dot com times, but it also suffered from the dot com bust.
At its 2000 peak it reached over 7,000 points but fell to 1,660 two years later before recovering, and then falling again to a similar level in 2009.
Today, the NASDAQ lists more than 3,500 companies and boasts the highest trade volume in the U.S. market. More than $10 trillion worth of companies trade on the NASDAQ. The Nasdaq 100 set a new all-time high in 2021 over 15600.
Current NASDAQ Index
Currently, the NASDAQ index is climbing once again, and has been setting new record high after high since the Black Thursday collapse in 2020. Such an extreme polar move caused an opposite reaction to the upside, and due to how well technology has remained strong compared to other industries, the NASDAQ has outperformed all other indices.
Today, in 2021, the NASDAQ is currently trading at around 15,000.
Top Factors That Impact NASDAQ In 2021 & In the Future
Because the NASDAQ is an index, and carves out a slice of the market and how a range of companies are doing in the economy, it is unsurprising that the movement of the NASDAQ is quite well aligned with how the economy is doing, and the general health of the markets.
Therefore, major geopolitical events can have a massive impact on the NASDAQ, just as it does in the S&P 500 and others. When there are positive moves, especially for the US, and major companies can cash in on that good news, the index will usually rise. But when there are negative impacts, the same can happen in a downward trend.
A big factor is the Federal Reserve and its different policies. The Federal Reserve’s ongoing policy of near-zero interest rates that has made equities more attractive than bonds. This is still on going during the Covid-19 pandemic, and while it is for different reasons, it does add to the allure of things like NASDAQ
Additionally, the maturation of technology companies is certainly helping as well as the rise of Apple Inc, a company that didn’t appear among the largest 20 companies by market value in the index 15 years ago and now represents more than 10 percent of its weight. Many of the world’s biggest tech companies are found in the NASDAQ and they are wrestling the momentum from other major companies in terms of performance.
NASDAQ Forecast For 2021
The entirety of 2021 will no doubt be primarily based around how the markets work with the global pandemic which is starting to ease and allowing for the economy to try and right itself. This is an important next few months for the rest of the year because while the virus may mostly be under control there is little knowledge of how the economy will come back on track. There is also now a delta variant of COVID spreading that is bringing risk back to markets.
Future NASDAQ Predictions
As explained previously, the predictions on the NASDAQ into the future are correlated somewhat to the economy and the general market, but where the NASDAQ differs is with its more digital approach and digital makeup.
The NASDAQ has a basis for technology and because of the impending fourth industrial revolution which will be predicated on technology this index is an important one, and a popular one. The future predictions on this market will be determined on how well the technology wave comes in.
What is interesting to note is that while the pandemic plays its part in stunting the market, it may well boost the need for better technology, and this could impact the growth of the NASDAQ in the future.
NASDAQ Predictions for next 5 years (until 2025)
The NASDAQ has grown along a parabolic curve and could continue to climb. However, as many top analysts fear, the stock market could be in a bubble and no more so than tech stocks. This would suggest the Nasdaq 100 could see downside ahead when the rally finally slows. The selloff could look similar to the dot com bubble collapse.
NASDAQ 10 Years Forecast (Until 2030)
Predicting long term – as in the next 10 years – is difficult and highly speculative. However, many analysts have offered their take.
Expert Price Predictions
Wallet Investor is speculating that the Nasdaq 100 will reach 17,895 by the year 2026, which at the rate it has been climbing doesn’t sound unreasonable. However, at that rate it would need to stave off a larger correction.
The capital-focused website has the NASDAQ pegged for a long term high of 23,232 for the highest forecast we could find.
Summary: What Is The Future Of NASDAQ
The NASDAQ index is one of firsts. It was the first digital market place and it has become one of the leading indexes for the future of trading. This means it has ties to technological advances and will be a major market mover as technology grows.
In order to take advantage of the lows that the market is currently going through and the expected return to new highs after the pandemic, it is a good time to find a platform that offers you the chance to trade the NASDAQ index — such as PrimeXBT: you can sign up here.
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