Will Apple Keep Nasdaq from a Record High?

By Douglas A. McIntyre Published Dec 16, 6:21AM EST

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A year ago, the idea that the Nasdaq Composite could reach its record high, set on March 10, 2000, seemed preposterous. That high was 5,132.52, and it had been driven up by absurd valuations of primarily Internet stocks. As many of them collapsed into oblivion, so the Nasdaq Composite. But the index only needs to run 28% to reach that March 10 level again. Based on the surge of the stock market in the past five years, the summit is much more attainable. After all, the Nasdaq is higher by almost 160% over the past five years. But a very few stocks, and perhaps Apple Inc. (NASDAQ: AAPL) alone, could hold the Nasdaq relatively near its current position.

The exchange describes that index:

The NASDAQ Composite tracks the stocks in the index with a market capitalization weighting of each security in the index. This means the larger companies listed on the NASDAQ exchange have more influence over the index value than the smaller companies.

Ten companies make up about a third of the weight of the index, with Apple as the largest component. Its share price is up less than 10% in the past year. The composite would need more help from Apple to make a significant surge.

Another aspect of the index that makes a sharp increase in the Nasdaq Composite unlikely is the very modest performance, or retreat, of the other large market cap members. Microsoft Corp. (NASDAQ: MSFT) is high up the index based on weighing. Not far down the list of weighted companies sit Cisco Systems Inc. (NASDAQ: CSCO) and Oracle Corp. (NASDAQ: ORCL), which are ancient tech companies by most measures and have become penned in by smaller rivals.

On the plus side of an additional advance of the index is Google Inc. (NASDAQ: GOOG), which also has a high weighting, and its shares may continue to rally as its earnings improve. Also likely to help any improvement is Amazon.com Inc. (NASDAQ: AMZN).

It is an irony that the Nasdaq run to more than 5,000 was pushed by shares in companies with stocks that had only been listed a year or two. Most of these then crippled the index’s rush up. Now, limiting a further advance are some companies that have been listed for decades.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.