Nasdaq: Winner to Loser

A year ago, the word “Nasdaq” was synonymous with investing success. Today, for many Americans it is a symbol of financial failure.

The Nasdaq Stock Market is the nation’s second-largest securities market, after the New York Stock Exchange. Nasdaq, which stands for National Assn. of Securities Dealers Automated Quotation system, was created in 1971 as an all-electronic rival to the NYSE.

Unlike at the NYSE, where shares are traded on a stock exchange floor, Nasdaq shares are traded among brokerages linked nationwide by computers.

In its early years Nasdaq was the trading venue for companies that couldn’t meet the listing standards of the more prestigious NYSE. But as the U.S. technology industry soared in size and scope in the 1980s and 1990s, Nasdaq became the premier address for those stocks.

The Nasdaq composite stock index tracks all 4,100 Nasdaq-listed stocks, many of which aren’t in the tech business.

But the biggest firms in the index--mostly tech giants--have the greatest effect on its value. As those shares, including Microsoft Corp., Cisco Systems and Intel Corp., rocketed in 1998, 1999 and early 2000 amid investors’ excitement over the Internet and tech’s growth potential, they lifted the index from 1,570 at year-end 1997 to a peak of 5,048.62 last March 10, for a 221% gain.

By contrast, the Dow industrial average rose 26% in that period.

Just as they led the index up, major tech stocks have led the crash of the last year as the companies’ growth has dimmed with the weak economy. The Nasdaq index has tumbled to 2,117.63 as of Friday, a 58.1% drop from its peak.

Among leading tech names, Microsoft has slumped from a peak of $117 to $56.69 now, Cisco Systems has dropped from $82 to $22.19, Intel has fallen from $75.81 to $29.31 and Oracle has slid from $46.44 to $16.88.