Technology shares are feeling the heat and the NASDAQ Composite Index comprising over 3000 stocks is down by almost 8.1 per cent from its 52-week high level of 16212 as currently the index is around 14893 levels. Even Nasdaq 100, a more compact index comprising the top 100 non-financial companies listed on the Nasdaq exchange, is down by nearly 6.8 per cent from its 52-week high levels of 2021.
What may come as a matter of concern is the fact that according to Ned Davis Research, over 36% of Nasdaq stocks are down at least 50% while the index is off less than 7%, an extremely rare combination.
Technology stocks dominate almost half of Nasdaq Composite Index weightage. With close to 20%, the consumer services sector ranks second, while health care is third at almost 10%. Next in line are consumer goods, financials, and industrials, with allocations of 7.61%, 6.61%, and 6.09%, respectively.
What may come as a relief is the earnings season if at all the results throw up some positive surprises. In the meanwhile, investors may continue to hold and add quality stocks that have the potential to remain relevant in the long term.
While US inflation continues to show uptick, the chances of FED to hike interest rates in quick succession is not being ruled out.
The high valuations currently being enjoyed by growth stocks may likely suffer but any correction in prices may provide buying opportunities to long term investors as well.
The easiest way for individual investors to participate in the Nasdaq Composite is Fidelity’s exchange-traded fund. Launched in 2003, the Fidelity Nasdaq Composite Index ETF (ONEQ) tracks the broad-based Nasdaq Composite Index. In addition to the ETF, Fidelity Nasdaq Composite Index Fund (FNCMX) can also be used to take exposure to the Nasdaq Composite. And, to take exposure in Nasdaq 100 stocks in a single investment, the Invesco QQQ is the exchange-traded fund that may be considered for investment.