Nasdaq Quarterly Streak Sets Record as High Proves Elusive

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Photographer: Scott Eells/Bloomberg

While the Nasdaq Composite Index has hit a wall trying to reach its all-time high from 15 years ago, it just ran off a streak of success it never managed even during the Internet bubble.

Even with Tuesday’s 0.9 percent drop, the 44-year-old equity gauge ended the January-to-March period with a 3.5 percent gain -- extending the number of quarterly advances to nine. Increases of 13 percent or more in Apple Inc. and Biogen Idec Inc. helped lift the Nasdaq within 1 percent of its record three times in the quarter.

The gauge dominated by technology and consumer shares has been one of the best-performing collection of stocks in the world since the end of 2012, trailing the Shanghai Composite Index and a handful of others over the stretch. Returns approaching 26 percent annually are rewarding bulls who bet companies would find ways to boost profits even as economic growth trailed historical averages.

The Nasdaq is rising “at a pace of appreciation that we really haven’t seen since the late 1990s,” Dan Greenhaus, chief strategist at BTIG LLC in New York, said in a phone interview. “This is, by all accounts, one of the strongest periods for the stock market in the postwar period.”

Index Performance

The index had the best showing in the first quarter compared with other major U.S. equity gauges. The Standard & Poor’s 500 Index finished with a 0.4 percent gain while the Dow Jones Industrial Average erased its advance on the final day. Only the Russell 2000 Index of smaller companies outpaced the Nasdaq, with a 4 percent increase.

The Nasdaq slid 0.4 percent to 4,880.23 at 4 p.m. in New York, while the S&P 500 decreased 0.4 percent.

The Nasdaq has outperformed the S&P 500 by 17 percentage points since the run of quarterly gains began in 2013. That marks the biggest nine-quarter performance gap between the two indexes since the period ended March 2011, data compiled by Bloomberg show. The Nasdaq’s previous record for quarterly gains was eight, set in 1995 and 1996.

It closed in March three times above above 5,000, its first forays past that level since March 2000. It stalled within about 20 points of its dot-com-era record on March 20, dropping 2.5 percent to the end of the month.

Apple, Amazon

Large-cap technology companies paced gains, with Apple climbing 13 percent. Amazon.com Inc. added 20 percent, while Twitter Inc. surged 40 percent, driving a 4.6 percent rally in the Nasdaq Internet Index.

As the Nasdaq has closed in on its record over the last few years, gains have been much more spread out than they were during the 1990s Internet bubble. Since the start of 2012, the Nasdaq 100 Index, a basket of the gauge’s biggest stocks, is up 90 percent, compared with 88 percent for the broader measure.

Over the same period at the end of the Internet bubble, the Nasdaq 100 climbed 450 percent -- 208 percentage points more than the Nasdaq Composite. That happened because gains were concentrated in the biggest companies.

The composite index was also bolstered during the latest quarter by a rally in health-care stocks. The Nasdaq Biotechnology Index jumped 13 percent during the period, also completing its ninth straight quarterly gain, the best streak since 2000. The gauge has surged 151 percent since the start of 2013.

Pharmacyclics Inc. surged 109 percent over the past three months, while Regeneron Pharmaceuticals Inc. soared 10 percent and Biogen jumped 24 percent.

“The Nasdaq has a great amount of exposure to biotech shares, which has been an important component in its recent run,” Greenhaus said. “The sector has been a powerful tailwind.”

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