S&P 500 vs NASDAQ Composite
The S&P 500 is the standard benchmark for large-cap U.S. stocks. The NASDAQ Composite skews heavily toward technology. The spread between them measures the tech premium.
- S&P 500
- NASDAQ
The S&P 500 covers 500 large U.S. companies across all sectors, weighted by market capitalization. The NASDAQ Composite covers all stocks listed on the NASDAQ exchange — about 3,000 names, but the index is dominated by a handful of mega-cap technology companies that together account for over half its weight.
The two indexes usually move in the same direction but with different amplitudes. In tech-led rallies, NASDAQ outperforms — sometimes dramatically. In tech selloffs, NASDAQ underperforms by similar margins.
The 1999–2000 dot-com bubble was the most extreme divergence. NASDAQ tripled in 1999 alone while the S&P rose ~20%. The reversal was symmetric: NASDAQ fell 78% from peak to trough by October 2002 while the S&P fell 49%.
The 2020–2021 tech rally and 2022 reversal repeated the pattern at smaller magnitude. NASDAQ outperformed the S&P by ~40 percentage points from March 2020 to November 2021, then underperformed by ~15 points during the 2022 selloff.
Looking at the two indexed from a common base shows the persistent NASDAQ outperformance over long horizons — and the cycles of relative pain that come with concentration in a single sector.
Frequently asked questions
What is the difference between the S&P 500 and the NASDAQ Composite?
The S&P 500 tracks 500 large U.S. companies across all sectors, weighted by market cap. The NASDAQ Composite tracks about 3,000 stocks listed on the NASDAQ exchange, but a handful of mega-cap technology companies account for over half its weight — so it's effectively a tech-heavy index, while the S&P 500 is broadly diversified.
Why does the NASDAQ swing more than the S&P 500?
Its heavy concentration in technology amplifies both rallies and selloffs. In the 1999 dot-com bubble NASDAQ tripled while the S&P rose ~20%, then fell 78% peak-to-trough versus the S&P's 49%. The 2020–22 cycle repeated the pattern at smaller magnitude. Concentration in a single sector means higher highs and lower lows.
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