The Nasdaq stock index is adjusting to curb the weight of big tech companies

He Nasdaq-100 stock indexwhich brings together major technology stocks and is the second largest automated electronic exchange in the United States, this monday the “special rebalancing” comes into effect. with the aim of limiting excessive influence on the selection of the ‘magnificent seven’, as the group consisting of Microsoft, Apple, Nvidia, Tesla, Alphabet (Google’s parent company), Meta Platforms and Amazon is called.

The weight of these seven companies in the stock market index was about 55%, so the price of the index was very marked by what a few companies did, despite the fact that the selective index consists of 100 companies. Therefore, a re-adjustment is made to “address over-concentration” in the index. This does not mean that companies will be added or removed from the index. What was set was some restrictions so that the combined weight of the five companies with the largest market capitalization was set at 38.5% compared to 46.7% held by Apple, Microsoft, Google, Amazon and Nvidia.

The third change in its history

In addition, as the warehouse manager explains, no company outside the five most capitalized may have a weight greater than 4.4% of the index or above the percentage represented by the fifth company with the highest market valuation, the lower of the two will be awarded. The changes take effect before the opening this Monday. This is the third rebalancing that Nasdaq has conducted in its history; the previous ones were made in December 1998 and May 2011. According to analysts, the rebalancing of the Nasdaq could increase the weight in selective securities such as Starbucks, Mondelez International, Booking Holdings, Gilead Sciences, Intuitive Surgical, Analog Devices and Automatic Data Processing (ADP).