<p>The Nasdaq Composite Index is a market capitalization-weighted index that tracks over 3,000 companies listed on the Nasdaq stock exchange.</p>

<h2>How It Works</h2>
<p>The index is calculated using a modified market capitalization formula, which adjusts for the effects of stock splits and distributions. It includes all common stocks listed on the Nasdaq exchange, excluding ADRs (American Depositary Receipts) and tracking stocks. The index is market cap-weighted, meaning larger companies have a greater influence on its performance.</p>
<p>To be included in the index, a company must meet certain criteria, such as minimum market capitalization, average daily trading volume, and length of time listed on the exchange.</p>

<h2>Why It Matters</h2>
<p>The Nasdaq Composite Index is a widely watched benchmark for the U.S. technology sector and the broader market. It's often used as a gauge of investor sentiment and market conditions. For instance, during the dot-com boom in the late 1990s, the index soared, reflecting the enthusiasm for tech stocks. Conversely, its sharp decline in 2000-2002 indicated the bursting of the dot-com bubble.</p>
<p>For investors, tracking the Nasdaq Composite can provide insights into the performance of growth-oriented stocks and the broader market. It can also serve as a useful tool for comparing the performance of different investment strategies or sectors.</p>