Nasdaq became synonymous with the dot-com crash after its Composite Index peaked in March 2000.
The Nasdaq Composite reached 5,048.62 on March 10, 2000. Investors had poured money into internet and technology companies, often valuing businesses for rapid user growth rather than profits. Many firms had limited revenue, weak business models, or no realistic path to earnings, yet their shares rose dramatically.
After the peak, rising interest rates, disappointing corporate results, and a shift in investor expectations triggered a prolonged sell-off. The Nasdaq Composite lost about 78 percent of its value by October 2002. Numerous internet companies failed, while stronger firms such as Amazon and eBay survived and later expanded.
The crash is sometimes incorrectly described as the collapse of the internet itself. Instead, it was a market and financing collapse concentrated in companies associated with the new technology. The Nasdaq is an exchange and index family, while the Nasdaq Composite is the specific broad index most often used to measure the episode. The later success of the internet does not erase the severe losses suffered by early investors.