Nasdaq Composite Advances Toward 2000 Record Amid Global RallyMichelle F. Davis and Lu Wang
The Nasdaq Composite Index jumped to the highest level in 15 years, nearly wiping out its losses since the end of the dot-com bubble, as Biogen Idec Inc. and energy shares helped boost a global equities rally.
The Nasdaq Composite advanced 0.7 percent to 5,026.42 at 4 p.m. in New York, after coming to within 7 points of its all-time high set in March 2000. The Standard & Poor’s 500 Index climbed 0.9 percent to 2,108.10, to its biggest weekly gain in six. The Dow Jones Industrial Average added 168.62 points, or 0.9 percent, to 18,127.65. The Russell 2000 Index increased 0.9 percent to a record. The MSCI All-Country World Index gained 1.3 percent for its best week since July 2013.
“The Nasdaq’s in much better, healthier shape than it was in 2000 in terms of earning power and the quality of the companies it constitutes -- biotech is playing a larger role,” Todd Lowenstein, who helps manage $16 billion at HighMark Capital Management Inc. in Los Angeles, said by telephone.
The Nasdaq Composite surged past 5,000 for the third straight day as Biogen Idec jumped to an all-time high on favorable Alzheimer drug results. The Nasdaq Biotechnology closed at a record after gaining 6.2 percent for the week, the most since October.
Intel Corp., Broadcom Corp. and TripAdvisor Inc. soared more than 1.8 percent to spur a 0.7 percent jump in the Nasdaq 100 Index.
“One of the exciting things about this recovery is new technology is being commercialized, whether it’s social media or cloud,” Jason Benowitz, a New York-based senior portfolio manager who helps oversee $4.5 billion at Roosevelt Investment Group Inc., said by phone. “That’s feeding a lot of growth in Nasdaq. In the peak of the Internet bubble, all you need was business plan.”
Nike Inc. rallied after earnings that exceeded analysts’ forecasts as demand in North America and a bounce back in China offset the drag from a strong dollar on European sales. Tiffany & Co. retreated after predicting currency headwinds will bring a sharp decline in net income.
More than 9.8 billion shares changed hands on U.S. exchanges, 45 percent above the three-month average, and the most since Dec. 19. Some futures and options on stocks and indexes expired today in a process known as quadruple witching. The operator of the S&P 500 also rebalanced the index in a quarterly move to adjust member weightings.
The Chicago Board Options Exchange Volatility Index fell 7.5 percent to 13.02, its lowest level in more than three months. The gauge, know as the VIX, posted a 19 percent weekly drop, its biggest since January.
The S&P 500 and Dow are less than 1 percent from their all-time highs set March 2. The Russell 2000 Index is at a record, and the Nasdaq Composite Index sits 0.4 percent below its highest-ever level in March 2000.
“U.S. equities and especially international equities, of all the alternatives, still look like the healthiest alternative,” Tim Courtney, who helps oversee about $1.3 billion as chief investment officer of Exencial Wealth Advisors, said in a phone interview from Oklahoma City. “Until another viable alternative comes about -- that doesn’t look like it’s going to happen until rates start to rise -- stocks should do well.”
The S&P 500 posted a 2.7 percent weekly gain, snapping a three-week losing streak after the Federal Reserve acknowledged that economic growth has moderated, indicating it is in no rush to raise interest rates. The central bank said it won’t tighten until it is “reasonably confident” inflation will return to its target and the labor market improves further.
The Fed also dropped an assurance it will be “patient” in raising rates. Speculation that it is getting closer to an increase has weighed on U.S. stocks, making the benchmark equity index’s 2.4 percent rise this year one of the developed world’s worst performances. Meanwhile, the European Central Bank’s introduction of quantitative easing has helped push the Stoxx Europe 600 Index up more than 17 percent.
All 10 of the S&P 500’s main industries rose Friday, led by energy companies’ 1.4 percent rally as oil prices rebounded. Transocean Ltd. and Halliburton Co. climbed more than 3 percent. West Texas Intermediate crude oil added 4 percent.
Consumer stocks advanced at least 1 percent, paced by gains in Wal-Mart Stores Inc., Kellogg Co. and ConAgra Food Inc.
Biogen Idec jumped 9.8 percent after trial results for its experimental Alzheimer’s drug were so positive that the drugmaker is skipping mid-stage testing to move directly into final-stage trials later this year.
Dow component Nike rose 3.7 percent to an all-time high. The world’s largest sporting-goods maker posted third-quarter profit that topped analysts’ estimates. Nike is taking advantage of missteps at Adidas AG, the No. 2 supplier of sports gear. After years of losing market share, the Herzogenaurach, Germany-based company is looking for a replacement for Chief Executive Officer Herbert Hainer.
Darden Restaurants Inc., owner of the Olive Garden chain, among others, advanced 2.9 percent to a record after raising its 2015 earnings forecast. The company’s third-quarter profit exceeded analysts’ forecasts.
Tiffany slipped 4 percent, the most since January. The world’s second-largest luxury jewelry chain predicted a 30 percent decline in net income this quarter.
The stronger dollar has hit Tiffany with a double-whammy by lowering the value of overseas sales and making it less attractive for foreign tourists to come to the U.S. to shop. As it tries to bounce back, Tiffany has been raising the prices of some jewelry and marketing more entry-level fashion pieces.