By Dan Strumpf
The Nasdaq Composite Index cruised to a record closing high
Thursday, surpassing a 15-year milestone last reached at the height
of the dot-com era.
The index rose 20.89 points, or 0.4%, to end at 5056.06,
exceeding its all-time closing high of 5048.62 last reached on
March 10, 2000.
The gain is the latest for the technology-heavy index, which is
up 6.8% this year, surpassing other big market benchmarks. The
latest ascent follows several foiled attempts to surpass the
index's high-water mark in recent months. The Nasdaq rose above
5000 in early March, but fell in subsequent weeks amid a cloudy
first-quarter earnings season and hiccups in the U.S. economy.
On Thursday, the Nasdaq began the session lower along with the
rest of the stock market, then spent much of the morning creeping
higher before punching through the closing record at 11:55 a.m. ET.
It sustained that level for the remainder of the session.
Still, stock traders said it was not an unusually busy day
despite the new milestone. Much of the day's focus remained on a
torrent of first-quarter earnings reports, which were mixed.
"The market saw pretty broad based strength, but it was not a
frenzied day," said Brian Fenske, head of equity sales trading at
brokerage ITG in New York. Trading volumes clocked in at around 6.6
billion shares, roughly in line with the year's average.
While the Dow Jones Industrial Average and the S&P 500 have
notched dozens of new records in recent years, the Nasdaq has taken
much longer to recover from the dot-com bust. The landscape for
technology stocks in the last 15 years is much changed, with
stalwarts like Google Inc. and Apple Inc. replacing the hot
Internet startups that dominated the Nasdaq in 2000.
The changes in the index have been among the forces lifting it
higher in recent years. At its peak in 2000, 65% of the market
capitalization in the Nasdaq Composite was technology stocks.
Today, the technology weighting in the index has shrunk to 43%. At
the same time, the number of companies in the index has fallen
dramatically--to 2,569 today, down from 4,824 in March 2000.
Now, the index's biggest firms include many highflying stocks in
the biotechnology sector.
Gilead Sciences Inc., with a market capitalization of $154
billion, has risen 12% this year and 52% in the last 12 months.
Amgen Inc., another top performer with a market size of $129
billion, is up 6.2% this year and 46% in 12 months. Biogen Inc., at
$99.4 billion, has soared 27% this year and 48% in 12 months.
Also propelling the index have been steady gains in Apple Inc.,
the stock market's largest company by market cap. Shares of the
iPhone maker are up 17% in 2015 and 75% in the past year.
"The biotechs are actually delivering on expectations," said
Brendan Connaughton, chief investment officer at ClearPath Capital
Partners, which manages about $250 million out of San Francisco.
"High-profile Nasdaq tech names, like Facebook--they've
delivered."
The Nasdaq's recent rise comes against a backdrop of renewed
worries over the slowing pace of U.S. economic growth and hiring,
and concerns over the prospect of interest-rate increases by the
Federal Reserve, expected later this year. In Europe, new stimulus
efforts by the European Central Bank and signs of growth have
cheered investors, but Greece's fiscal troubles continue to cast a
shadow over the continent.
Adjusted for inflation, the Nasdaq still has a long way to go
before setting a record. It would have to top 6891.93 to surpass
its March 2000 high, using January CPI data.
Other broad market indexes also notched gains Thursday. The Dow
Jones Industrial Average rose 20.42 points, or 0.1%, to 18058.69.
The S&P 500 gained 4.97 points, or 0.2%, to 2112.93.
Despite the Nasdaq record, it was business as usual for many
traders across Wall Street. Several attributed the midday
turnaround to mundane technical reasons following a sudden rally in
the stock futures market.
"Today is one of the bigger day of earnings that's out there, so
there's a lot for people to go through," said Jesse Lubarsky, a
trader at Raymond James in New York. "It's business as usual."
Mr. Lubarsky said the mood was decidedly more sober for this
Nasdaq milestone. "I was around for those days when you had the
Nasdaq in the year 2000" hit a record, he said. "Everyone had their
hats on. That was ridiculous. It was fun, but it was
ridiculous."
Several disappointing first-quarter earnings reports continued
to keep some shares in check. Shares of General Motors Co. fell
3.3% after the auto maker reported a $945 million net profit in the
first quarter, but its operating performance fell short of
expectations.
Procter & Gamble Co. stock lost 1.8% after the consumer
products maker said sales fell 7.6% in the March quarter due to the
strong dollar
Shares of AT&T Inc. gained 4.2% after first-quarter earnings
fell but still came in better than expectations.
In Europe, Germany's DAX fell 1.2% and France's CAC 40 lost
0.6%.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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