No one can say for sure how the index will perform, but history is on investors’ side.
This year has been a great one for two of the top three U.S. stock market indexes. S&P 500 It has increased by more than 15% Nasdaq Composite Index It’s up more than 20% and is leading the way.
Following the Nasdaq’s early gains, investors are both optimistic and skeptical. Some think the index will keep rising, while others think it will fall back this year. No one can say for sure what the rest of the year will bring, but we can look back at history to get a little perspective.
What has been driving the Nasdaq’s rise this year?
The Nasdaq Composite Index tracks the performance of all stocks listed on the Nasdaq stock exchange. The index includes companies from virtually every major sector, but the technology sector has been a major driver of growth this year. Specifically, the top seven stocks are driving growth.
how to use Fidelity Nasdaq Composite ETF (One Ex 0.85%) As a benchmark, we’ll show you roughly what the top seven holdings are and what percentage they make up in the index.
- Microsoft: 11.37%
- apple: 10.95%
- NVIDIA: 10.11%
- alphabet: 7.39%
- Amazon: 6.76%
- Meta Platform: 3.78%
- Broadcom: 2.26%
The Nasdaq contains over 3,100 companies, but is highly concentrated in the top stocks. This has worked to Nasdaq’s advantage, as these companies (excluding Apple) have significantly outperformed the overall market so far in 2024.
When seven companies make up roughly 52% of the index, and even the worst-performing among them is posting double-digit annual gains, good things are bound to happen (albeit with increased risk).
How the Nasdaq will finish 2024: What historical data tells us
It is important to emphasize that trying to predict short-term stock market movements is foolish. No one can accurately predict stock market movements, regardless of their “expertise” or resources.
You might think you could do this if you made some reasonable assumptions, but there’s no guarantee, as the stock market itself is notoriously irrational. That said, it’s never a bad idea to look at history for insights, unless you’re using history to make definitive predictions.
Here are the Nasdaq Composite Index’s first-half returns and year-end closing prices over the past 10 years:
| Year | First half return | Year-end returns |
|---|---|---|
| 2023 | 32% | 43.4% |
| 2022 | (29.5%) | (33.1%) |
| 2021 | 12.5% | 21.4% |
| 2020 | 12.1% | 43.6% |
| 2019 | 20.7% | 35.2% |
| 2018 | 8.8% | (3.9%) |
| 2017 | 14.1% | 28.2% |
| 2016 | (3.3%) | 7.5% |
| 2015 | 5.3% | 8.4% |
| 2014 | 5.5% | 15% |
Data source: Macrotrends. Table by authors.
In eight of the past 10 years, the Nasdaq has rallied in the second half of the year to finish stronger, which is encouraging news for investors, especially since many of the top companies leading the index have the momentum to keep it going for the rest of the year and beyond.
How to invest in the Nasdaq Composite Index
A great way to invest in the Nasdaq Composite Index is through an exchange-traded fund (ETF) like the Fidelity Nasdaq Composite Index ETF. It mirrors the Nasdaq Composite Index, allowing you to invest in the entire index rather than concentrating on specific stocks like the Nasdaq 100 Index.
Like the Nasdaq-100 (50.58% of the ETF), it is dominated by tech stocks, but also covers other sectors.
- Communication Services: 15.04%
- Consumer Cycle: 13.07%
- health care: 6.79%
- industry: 3.84%
- Consumer Defense: 3.80%
- Financial Services: 3.54%
- Base Materials: 1.04%
- utility: 0.89%
- real estate: 0.79%
- energy: 0.62%
It’s also a relatively inexpensive option with an expense ratio of 0.21%, or $2.10 per $1,000 invested. While it may not be the cornerstone of your stock portfolio as it’s missing a few sectors, the ETF could be a valuable addition.
Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, sister of Meta Platforms CEO Mark Zuckerberg and former market development director and spokesperson for Facebook, is a member of The Motley Fool’s board of directors. Stefon Walters owns shares of Apple and Microsoft. The Motley Fool owns shares of and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and has recommended long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
