NEW YORK — Tell someone to watch the Nasdaq and they will pull up the Composite, because that is the number the evening bulletins read out. They will believe they are watching close to 3,000 American companies. They are, in practice, watching about a hundred.
Eastern Herald measured it. Across the 125 trading sessions from late February to Monday, the daily returns of the Nasdaq Composite and the Nasdaq 100 moved together with a correlation of 0.9665. The median gap between them on a given day was sixteen hundredths of a percentage point. On 119 of those 125 days they went the same direction, and on most of them by very nearly the same amount.
The Composite fell 0.63 per cent to 26,014.70 on Monday afternoon in New York. The Nasdaq 100 fell 0.87. That 0.24-point difference is the entire contribution of roughly 2,900 additional listed companies, and it is a wider margin than usual.
None of this is a scandal. Both indexes are weighted by market value, and the largest handful of companies are worth more than the rest combined by a wide margin, so the arithmetic does exactly what the methodology says it will. It is worth stating plainly anyway, because the Composite is quoted daily as though it were a measure of the American technology economy at large, and it is not.
Nasdaq Composite Today: Where Monday Left It
The Composite closed the New York afternoon at 26,014.70, down 0.63 per cent, 4.3 per cent below its 52-week high and 25.7 per cent above its 52-week low. It sits between the Nasdaq 100, which fell harder, and the S&P 500 and Dow, which did not fall much at all.
| Index | Level | Session | 1 month | 3 months | Below 52-week high |
|---|---|---|---|---|---|
| Nasdaq Composite (IXIC) | 26,014.70 | -0.63% | +4.16% | -1.25% | -4.3% |
| Nasdaq 100 (NDX) | 29,055.25 | -0.87% | +3.30% | -1.45% | -5.5% |
| S&P 500 (GSPC) | 7,655.18 | -0.25% | +3.28% | +2.43% | -2.1% |
| Dow Jones Industrial Average | 53,441.56 | +0.31% | +2.88% | +5.66% | -2.4% |
| Russell 2000 (RUT) | 2,998.20 | -0.65% | +2.33% | +4.49% | -2.3% |
| Live intraday quotes, not settlements. Distance from the 52-week high is Eastern Herald’s calculation from the quoted level. | |||||
How Closely the Composite Follows the Nasdaq 100
The tracking study is the part worth keeping. We took the daily percentage change of both indexes over every session from February 25 to August 24, 125 in total, and compared them.
| Measure | Result |
|---|---|
| Correlation of daily returns | 0.9665 |
| Median absolute daily difference | 0.165 percentage points |
| Mean absolute daily difference | 0.263 percentage points |
| Sessions moving in opposite directions | 6 of 125 |
| Sessions where the gap exceeded 0.5 points | 23 of 125 |
| Calculated from published daily closing levels for both indexes over the same 125 sessions. Correlation is the Pearson coefficient of the two daily-return series. This is a price-return comparison and excludes dividends. | |
A correlation of 0.9665 means that if you knew what the Nasdaq 100 did on a given day, you could describe the Composite’s day almost exactly. The extra 2,900 companies add roughly a sixth of a percentage point of independent information, and they add it in one direction as often as the other.
Where the Small Companies Actually Show Up
If the Composite will not tell you what small American companies are doing, something else has to. The Russell 2000, which holds two thousand small-capitalisation companies and weights them the same cap-weighted way but without any megacaps to swamp it, is 2.3 per cent below its 52-week high and up 4.49 per cent over three months.
Over that same three months the Composite fell 1.25 per cent and the Nasdaq 100 fell 1.45. Small American companies have had a better quarter than the Nasdaq’s giants, and nothing in the Composite’s headline number would tell you so. Our Nasdaq 100 column for the same session found the same divergence from the other end, with the median member of that index 17.6 per cent below its own high against 5.5 per cent for the index.
Why the Composite Fell on Monday
The damage was almost entirely in semiconductors and memory. Micron dropped 5.5 per cent and Nvidia about 2.5, with the PHLX Semiconductor Index down 2.41 per cent on the day and 21.8 below its high. Fortune reported last month that the chip selling had begun to look indiscriminate enough to drive the Nasdaq toward a correction, and Monday did nothing to argue with that.
Money did not leave the market so much as move within it. The Dow rose while the Composite fell, a rotation the same publication has described as investors selling technology and buying consumer staples in the same session. Our Dow column, Nasdaq session column and S&P 500 column carry the rest of it.
What This Column Cannot Tell You Yet
We cannot give you the Composite’s advance-decline line, which would be the direct measure of what its 3,000 members did on Monday. Nasdaq publishes it, but not on any feed we can verify against a second source, and a breadth figure we cannot check is worse than none.
We also cannot say whether the tracking relationship is stable or simply reflects a period in which the megacaps happened to dominate. A 0.9665 correlation over 125 sessions is a description of the recent past, not a law. It would take a genuine small-company rally, sustained for months rather than weeks, to test whether the Composite can still move on its own, and the Russell’s quarter is the first hint in a while that such a thing might be starting.
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