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Investment Duel: Analyzing Nasdaq 100 Versus S and P 500 in the U.S Market

Triston Martin

Dec 12, 2023

Investment in US equity markets through mutual funds typically entails choosing between the funds pegged on the Nasdaq 100 or S&P 500 indices. These indices are prominent in the US equity market, which is known for such indices’ long history and familiarity worldwide.

However, they are quite different in composition, such as several companies, sectoral weights, and allocation, even though they have several extensive holdings. Such causes a variation in their performance as they proceed through time.


The Nasdaq 100 index has provided information about the top 100 non-financial firms listed on the Nasdaq stock exchange since 1985. It is used for financial comparison with the S&P 500 as a benchmark.

The US hosts the major international technological and non-financial companies in the world. The Nasdaq 100 focuses on the industries mentioned earlier but does not include financial giants. Tech giants like Apple, Google, Microsoft, and Tesla dominate the index due to this exclusion.

These companies lead in technology and product development. The Nasdaq 100 includes Facebook, Apple, Amazon, Netflix, and Google (now Alphabet) stocks. Technology accounts for over half of the index's weight, indicating its focus. Due to its tech stock focus, the Nasdaq 100 is more niche than the S&P 500 vs Nasdaq 100.

Products like Fidelity Nasdaq 100 offer avenues for investors to engage with this market segment. The Nasdaq 100's unique composition and role, in contrast to the S&P 500, make it a crucial element in financial analysis and investment strategies.

Major Components of the Nasdaq 100

  • Microsoft: Close behind Apple, Microsoft secures a 10.15% share in the Nasdaq 100. It is crucial in shaping the index's direction, akin to the shifts observed in the S&P 500 vs Nasdaq 100 comparisons.
  • Alphabet: With its Class C (4.18%) and Class A (3.86%) shares, Alphabet collectively holds a significant portion of the Nasdaq 100. This dual presence underscores Alphabet's influential role, similar to other tech giants in the index.
  • Facebook and Tesla: These two innovative companies hold 4.05% and 3.87%, respectively, showcasing their impact in the tech-heavy Nasdaq 100, paralleling trends seen in the S&P 500 and all time high S&P 500 moments.
  • NVIDIA, Paypal, and Adobe: NVIDIA (3.82%), Paypal (2.29%), and Adobe (2.15%) round up the top holdings. Their performances are critical in understanding the Nasdaq 100's dynamics, often compared with broader indices like the S&P 500 and Fidelity Nasdaq 100.

Key Sectors in the Nasdaq 100

  • Technology: The technology sector overwhelmingly leads with a 57.8% allocation, mirroring the tech-centric nature of the index. This is a crucial factor when examining the S&P 500 vs Nasdaq 100.
  • Consumer Services' Role: Holding 19.15%, consumer services represent a significant portion, highlighting the sector's influence comparable to that seen in all time high S&P 500 moments.
  • Consumer Goods': With a 9.08% stake, the consumer goods sector plays a notable role in the composition of the Nasdaq 100, akin to its impact on indices like the Fidelity Nasdaq 100.
  • Healthcare and Industrial Sectors: These sectors, holding 5.93% and 5.91%, respectively, contribute to the diversity of the Nasdaq 100, reflecting a trend similar to the sectoral distribution in the S&P 500.

S&P 500 Index

The 1957-founded S&P 500 Index is a key stock market indicator. The 500 largest U.S. publicly traded companies account for over 80% of all listed companies' market value. The S&P 500 represents American stocks comprehensively.

Market capitalizations determine S&P 500 stock weighting. A company's market value—defined by its share price and number of shares available for trading—impacts the index more. The index selection criteria are complex regarding market cap, the percentage of publicly traded shares, earnings growth, and trading volumes. The index is also well-balanced across sectors, so its representation of different sectors matches the overall market.

There are distinct sector allocations when comparing the S&P 500 vs the NASDAQ 100. For instance, the total representation of the technology sector to the S&P 500 index is less than 30%. This is different from the NASDAQ 100, where tech is more significant. The three industries form almost 53% of the S&P 500, which shows a more wide-ranging portfolio than the NASDAQ 100.

Leading Stocks by Market Capitalization

  • Apple: The highest weight in the S&P 500 index is 5.9%, assigned to Apple’s stock. It is one of the largest companies, which makes the S&P 500 different from the NASDAQ 100.
  • Microsoft: Close behind, Microsoft represents 5.6% of the index. Its substantial value in the market contributes heavily to the all time high s&p 50 figures.
  • Amazon: Amazon, another tech giant, holds 3.8% of the index. The company's influence in the technology sector mirrors trends in indices like the Fidelity NASDAQ 100.
  • Facebook: It shows that such technology- and social media firms make up about 2.1 percent of the S&P 500 and underlines their importance.
  • Alphabet Inc A and Alphabet Inc: Both Alphabet entities collectively hold 4.1% of the index, demonstrating the tech sector's dominance, which is also evident in the NASDAQ 100.
  • Tesla Inc: Tesla’s 1.7% allocation highlights its growing influence in the automotive and technology sectors.
  • Berkshire Hathaway Inc.: Diversifying the list, Berkshire Hathaway comprises 1.3% of the index, reflecting its stable position in the financial sector.
  • Nvidia Corp com: Nvidia, with its 1.3% weight, emphasizes the tech sector's impact on the S&P 500, paralleling trends in the NASDAQ 100.
  • JP Morgan Chase & Co.: As a financial institution, its 1.3% allocation shows the diversity of the S&P 500, including various sectors.

Sector Representation in the S&P 500

  • Health Care: Health care is also critical, with a market share of 13.3%.
  • Consumer discretionary: Amazon and other consumer discretionary companies boost the index's performance by 12.4%.
  • Financial: Unlike the Fidelity NASDAQ 100, the S&P 500 is heavily weighted toward banks and investment firms (11.4%).
  • Communication Services: Facebook and other prominent players in the 11.3% communication services sector demonstrate the market's dynamic nature and impact on indexes like the S&P 500.

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