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Nasdaq breaks 4,000
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December 29, 1999: 5:42 p.m. ET
Index closes above landmark level; Dow, S&P 500 also post records
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - The red-hot Nasdaq composite index closed above the 4,000 mark Wednesday for the first time in its 28-year history, powered by dynamic gains from wireless provider Qualcomm.
The Nasdaq composite rallied 69.35 points, or 1.75 percent, to 4,041.46, well above the record close of 3,975.38 set Monday. The index is up a whopping 84.3 percent for the year, surpassing the record for the largest annual jump by any major U.S. market index set by the Dow Jones industrial average in 1915 when it rose 81.7 percent. So far this year the Nasdaq composite has set 60 new records.
"A combination of holiday type volume, year-end window dressing and positive analyst comments on key Nasdaq components created an environment that was ripe for a move above 4,000,” said Tony Dwyer, chief market strategist at Kirlin Holdings.
The Dow industrials and the S&P 500 also managed record closes. The Dow added 7.95 to 11,484.66. The blue-chip index was up as much as 67 earlier, but still closed above Tuesday’s record high of 11,476.71.
The S&P 500 index rose 5.80 to 1,463.46, edging above the 1,458.34 record mark set last Thursday.
Breadth was positive on the New York Stock Exchange, with advances outnumbering declines 1,922 to 1,172. Trading volume was a moderate 569 million shares, reflecting the fact that many market participants are through trading for the year.
Treasury prices rose, with the bellwether 30-year bond gaining 12/32 of a point in price, lowering its yield to 6.44 percent from 6.47 percent late Tuesday.
In currency markets, the dollar fell slightly against the yen and rose against the euro.
Qualcomm lifts the Nasdaq
The Nasdaq’s star performer was wireless technology product provider Qualcomm (QCOM). The stock surged 156 points, or more than 31 percent, to 659 after PaineWebber initiated coverage of the stock with a "buy" rating and set a 12-month price target of $1,000.
Also boosting the Nasdaq were Internet stocks. Among the bellwethers, Amazon.com (AMZN) added 1-3/16 to 83-1/2, Yahoo! (YHOO) rose 13-7/16 to 403-11/16 and eBay (EBAY) advanced 3-11/16 to 143-9/16. eBay’s stock benefited from an upgrade by Sands Brothers to "buy” from "neutral.”
Marc Klee, portfolio manager at John Hancock's Global Technology Fund, said the recent rally in technology stocks is based on the sector's solid growth outlook "Strong fundamentals are the bottom line," Klee told CNNfn. "These companies will continue to show strong earnings gains into this next year."
Alfred Kugel, senior investment strategist at Stein Roe & Farnham, was also optimistic about the sector. He told CNNfn he expects to see continued strength. (678K WAV) (678K AIFF)
Despite the Nasdaq’s stellar performance, the upside potential for technology issues may be limited, Frank Getz, market analyst at Shields & Co., said, forecasting a pullback in the foreseeable future. (957L WAV) (957K AIFF)
Kirlin Holding’s Dwyer agreed. "It is important to acknowledge the Dow is breaking new highs. That is the beginning of a nice upward move, whereas the Nasdaq is long overdue for a significant correction,” he said.
Online brokerage services score
The brokerage firm Charles Schwab (SCH) soared 5-11/16, or nearly 17 percent, to 40, on volume that made it one of the most actively traded stocks on the New York Stock Exchange. The company said Wednesday it expects fourth-quarter profit to jump as much as 61 percent, beating Wall Street's expectations. Its Internet service eSchwab is the No. 1 online trader.
Schwab’s online competitors also rose sharply. E*trade Group (EGRP) jumped 2-3/4, or more than 10 percent, to 28-1/2 and Ameritrade (AMTD) gained 2-7/8, or 14 percent, to 23-3/8.
In the communications sector, AT&T (T), a member of the Dow industrials, gave back the day’s gains, falling 1/16 to 50-13/16. The long distance provider, along with Covad Communications Group (COVD), filed a motion in federal appeals court late Tuesday requesting that Bell Atlantic’s (BEL) plan to offer long-distance service in New York be blocked.
Covad Communications rose 1-5/16 to 54-1/16, while Bell Atlantic slipped 7/16 to 61-3/4.
Some seasonal window-dressing
A number of strategists noted that year-end "window dressing” -- in which portfolio managers seek to show investors that they hold the year’s top performers -- is helping to drive the year-end rally.
"It’s a very momentum-driven market. The trend is to buy those stocks that are increasing the most,” said Richard Cripps, chief market strategist at Legg Mason Wood Walker.
"It’s more window dressing in anticipation of a strong January rather than any change in the fundamental outlook,” Cripps added.
Gail Dudack, market strategist at Warburg Dillon Read, agreed. She told CNNfn that along with window dressing, Christmas bonuses are getting invested. (607K WAV) (607K AIFF)
Analysts noted year-end tax strategies also contributed to gains. "It is a mad scramble to get rid of those stocks that weren’t doing well to get the tax credit on them. We’re seeing wild times and a volatile market that will last through tomorrow (Thursday),” said Robert Dickey, technical analyst at Dain Rauscher Wessels.
Warburg Dillon Read’s Dudack expects the market’s uptrend to continue until January. But she forecasts an eventual slowdown when the Federal Reserve begins a much-anticipated interest-rate hike cycle in February.
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