S&P 500 and Nasdaq 100 are two prominent indices that investors look forward to while investing in the US stock market. Both the indices – S&P 500 and Nasdaq 100 – are diverse in nature and largely represent a different set of industries if not stocks. S&P 500 is made up entirely of large-cap US stocks, which adequately reflect all facets of the US economy. Information technology, health care, and communication services are the top three industries in the S&P 500. Nasdaq 100, on the other hand, is a tech-dominated index with the likes of Microsoft, Apple, Amazon, Alphabet (Google), Meta (Facebook), Intel, Cisco Systems, Comcast, Pepsico, Tesla, Nvidia, Adobe, and Paypal among others included in the index. Apple, Microsoft, Amazon, and Alphabet are the top stocks that are common to both indices.
No wonder, the tech-heavy Nasdaq 100 index has hit the most in 2022. While S&P 500 has just about managed to come out of the bear market after falling 20 percent from its recent highs, it is still down by almost 17% in 2022. Nasdaq 100 index finds itself 30% down in 2022, much of its downfall being attributed to rising rates and dwindling economic prospects.
S&P 500 is trading at just under 4000 and the 52-week low and high for the index is 3,491.58 – 4,818.62. For the S&P 500, 3600 is a key technical level for many analysts. Nasdaq 100 is trading at just around 11500 and the 52-week low and high for the index is 10,440.64 – 16,607.19.
The S&P 500 index consists of multinational corporations with sound business models and proven track records. Not only in the technology sector but also in other important industries, the US economy is a hub for innovation. The performance of SPY closely mirrors that of the S&P 500 index. By index weighting, the three largest stocks in the S&P 500 index are Microsoft, Apple, and Amazon. Other notable stocks include Facebook, Berkshire Hathaway, and Visa.
The SPDR S&P 500 ETF Trust (SPY), also referred to as the SPY ETF, is the ETF to use when investing in S&P 500 companies. You can gain exposure to some of the top US stocks across eleven key industries by purchasing SPY ETF. ETF that gives you access to all 100 Nasdaq companies with a single investment is the Invesco QQQ Trust (QQQ). Invesco QQQ is an exchange-traded fund that tracks the Nasdaq 100 Index.
Moving into 2023, investors will hope for a turnaround in the fortunes of the S&P 500 and Nasdaq 100 companies. Any reversal in the interest rate scenario could be good for the technology sector stocks else S&P 500 index may continue to offer diverse opportunities. Holding S&P 500 and Nasdaq 100 through ETFs could still be a better strategy for investors.