It happened almost a year ago, and it's happening again.
That is still true even though the Nasdaq executed a "special rebalancing" of its Nasdaq-100 tech-heavy index to reduce Apple's 20% weighting down to 12% last April.
With Apple's impact on the Nasdaq 100 now approaching 17% (that's greater than Google Inc. (Nasdaq: GOOG), Amazon.com Inc. (Nasdaq: AMZN) and Intel Corp. (Nasdaq: INTC)…combined), it's only a matter of time before another rebalancing takes a bite out of Apple's influence on this important index.
The problem isn't that Apple's share price has been so strong.
It's that investors may be unaware that the Nasdaq 100's rise and the Nasdaq Composite's jump to new 10-year highs wouldn't have been remotely possible without Apple's 60%+ gain since last summer.
Instead, investors need to understand Apple's impact on these market barometers and pay more attention to the core movements in those markets, not just the shine of a single stock.
Apple's Gigantic Impact
Apple's outsized impact on the Nasdaq-100 (NDX), which is a 100-stock index of the largest domestic and international non-financial companies listed on the Nasdaq, impacts in equal measure the popular $32 billion PowerShares QQQ Trust (Nasdaq: QQQ). The QQQ is an ETF based entirely on the NDX.
Apple's nearly 17% weighting in the NDX causes the NDX and the QQQ ETF to be closely correlated to Apple's stock whenever it makes a big move up or down.
The NDX (and by extension the QQQ ETF) is also a sub-set of the Nasdaq Composite Index.
The Nasdaq Composite Index (COMP) measures all of the domestic and international common stocks listed on The Nasdaq Stock Market. The COMP is one of the most widely followed and quoted major market indices.
Apple's weighting in the Nasdaq Composite is 10.6%. Thanks in no small part to this heavy weighting, the COMP is now approaching 3,000 – a level it hasn't seen since November 17, 2000.
But it's not just the tech-heavy NDX and COMP where Apple has an impact.