The Nasdaq Composite Index, a key measure of the U.S. stock market, is currently experiencing a correction. Within its renowned Nasdaq-100 subset, about 20 stocks have fallen by 10% or more in just one week, leading up to Wednesday’s market close.
Nasdaq Composite Index – A Look at the Correction
Exploring the Nasdaq-100 Index
The Nasdaq-100 Index (NDX) comprises the largest 100 nonfinancial companies listed on the full Nasdaq exchange, with each company’s weight determined by market capitalization. Its movements are closely tracked by the Invesco QQQ Trust ETF (QQQ). On Thursday, the index fell by 1.9%, as a result of align Technology Inc. (ALGN), a company specializing in orthodontic and dental devices, experiencing a significant decrease in its shares. Align Technology Inc.’s stock plummeted by 25% after its quarterly sales and earnings fell significantly below analysts’ expectations. The decline was attributed to a decrease in demand for its services.
Does U.S. GDP Growth Contribute to Stock-Market Decline?
Interestingly, the day’s stock-market declines may have been influenced by a higher-than-expected third-quarter growth rate of 4.9% for the U.S. GDP. This unexpected growth figure could have impacted market sentiments and contributed to the overall decline in stock prices.
While the Nasdaq Composite Index undergoes a correction, it’s essential for investors to heed the bearish warning signaled by the seven companies propping up the U.S. stock market.
The Nasdaq-100 Index: A Year of Growth and Recovery
The Nasdaq-100 Index has experienced a remarkable rise of 29% this year, largely driven by the success of two tech giants, Apple Inc. and Microsoft Corp., which collectively account for approximately 21% of the index’s total weight.
Apple’s stock has seen a substantial increase of 28% year-to-date, while Microsoft has achieved an impressive growth of 37%.
This significant recovery in the Nasdaq-100 comes after a 33% decline in 2022. However, it is important to note that it is still down 11.9% from its position at the end of 2021.
Let’s take a closer look at the nine stocks in the Nasdaq-100 that have experienced a decline of 15% or more this month. The table below provides additional details on their price changes and valuations:
Nasdaq-100 Stocks with Significant Decreases This Month:
| Ticker | Company | Price Change (%) | Valuation | |——–|—————————————————————-|——————|———–| | XYZ | Example Company 1 | -20 | $X | | ABC | Example Company 2 | -18 | $Y | | DEF | Example Company 3 | -16 | $Z | | … | … | … | … |
Note: Click on the tickers to access more information about each company, fund, or index, including comprehensive news coverage.
It is worth noting that the table includes the current forward price-to-earnings (P/E) ratios for these companies, based on consensus estimates for the next 12 months from analysts polled by FactSet. In comparison, the weighted forward P/E for the entire Nasdaq-100 Index stands at 23.7, a decrease from the 30.4 P/E recorded at the end of 2021. To further contrast, the S&P 500 SPX is currently trading at a P/E ratio of 17.4 based on its weighted forward earnings estimate, down from 21.6 at the end of 2021.
The Nasdaq-100 Index’s journey this year is a testament to the resilience of the tech sector and the remarkable performance of leading companies. Despite challenges along the way, it has made significant strides in recovering from last year’s decline.
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