Nasdaq vs S&P 500: 40 Years of Returns, Drawdowns and Valuation
Higher average, deeper craters, one recurring question: is the premium worth the amplitude?
Two very different animals
The S&P 500 holds ~500 large U.S. companies across all eleven GICS sectors, weighted by float-adjusted market cap. The Nasdaq-100 (tracked by QQQ) holds the 100 largest non-financial Nasdaq-listed names — which today makes it a concentrated technology-and-platform index. Same era, different geometry:
| Metric | Nasdaq 100 | S&P 500 |
|---|---|---|
| Average annual return | +18.2% | +11.9% (total return) |
| Best year | 1999: +102.0% | 1954: +52.6% |
| Worst year | 2008: −41.9% | 1931: −43.8% |
| Deepest drawdown | −82.9% (2000–02) | −86.2% (1929–32) |
| Bear markets on record | 8 | 12 |
| Forward PE today | 24.3× | 20.9× |
Since 1985-10-01, the Nasdaq 100 has multiplied 262× (from 112 to 29,329 as of 2026-07-02).
The price of the higher return
The Nasdaq 100's edge — +18.2% average annual return vs the S&P's +11.9% — is paid for in amplitude:
- 2000–2002: −82.9%. The canonical bubble unwind. The S&P fell −49.1% over the same stretch. An NDX investor at the 2000 top waited ~15 years to break even; the S&P investor ~7.
- 2008: −41.9% in a single calendar year.
- Roughly 12% of all 5-year holding windows ended negative for the NDX (vs under 10% for the S&P) — the concentration cuts both ways.
Which one should you own?
The honest answer is that they answer different questions. The S&P 500 is a bet on U.S. large-cap capitalism, sector-diversified. The Nasdaq 100 is a leveraged expression of one theme — technology-platform dominance — that has been the winning theme for two decades but carries single-theme risk, currently at a 24.3× forward multiple vs the S&P's 20.9×. Owning QQQ on top of an S&P index fund doubles down on the same seven mega-caps that already dominate both (see Mag 7 concentration).
FAQ
Which has higher returns, Nasdaq or S&P 500?
The Nasdaq 100 has averaged +18.2% per year since 1986 vs the S&P 500's +11.9% (total return since 1928) — but with roughly double the drawdown depth: −83% in 2000–02 vs the S&P's −49%.
Is QQQ riskier than SPY?
Yes, structurally: ~100 names vs 500, no financials/energy/staples ballast, and top-10 weight near half the fund. About 12% of NDX 5-year windows ended negative vs under 10% for the S&P.
What is the Nasdaq 100's forward PE today?
About 24.3× (Bloomberg consensus, as of 2026-07-03), vs 20.9× for the S&P 500.
Computed from /api/ndx/annual-returns.json, /api/ndx/drawdowns.json, /api/sp500/annual-tr.json and /api/ndx/forward-pe.json, refreshed each trading day.