The biggest tech companies in the index that tracks the biggest tech companies in the United States have become too big, necessitating a rare special rebalancing of the Nasdaq-100 index.
The rebalancing, which takes effect before Monday’s opening bell, was triggered earlier this month when companies in the index with weightings above 4.5% saw their collective weighting exceed 48%, according to Cameron Lilja, global head of index products and operations at Nasdaq. The rebalancing will cap their overall weighting at 40%, based on index methodology.
Shares of megacap tech companies have been in freefall this year, with stocks like Nvidia more than tripling and Tesla more than doubling. The Nasdaq-100 is market capitalization weighted, which means that its major constituents have a greater influence on the performance of the index than its smaller ones.