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. Last Updated: 07/27/2016

Nasdaq Leads Way In Wall St. Bonanza




NEW YORK -- It's hard to believe Wall Street could outdo itself after propelling the Dow Jones industrial average from 10,000 to 11,000 in just over a month this past spring.


But the Nasdaq composite index turned in its own rapid 1,000-point rise and last week hurtled past 4,000 for the first time.


It took the Nasdaq seven weeks to make the climb to its latest milestone, a little longer than the Dow required. But in that time, the Nasdaq rose a phenomenal 33 percent, more than triple the 10 percent advance the Dow enjoyed in its last 1,000-point trek.


A confluence of factors is behind the surge in the technology-dominated Nasdaq.


Most notorious is the investing public's hunger for Internet stocks, but technical factors such as a limited number of available shares for some Nasdaq companies also have a role. And underpinning it all are some fundamental shifts in the U.S. economy.


"The whole economy is moving from the manufacturing-extractive industries into information processing and delivery and most of these [Nasdaq] stocks lie" in those growing sectors, said Robert Stovall, the president of Stovall/Twenty-First Advisers.


Moreover, according to A.C. Moore, chief investment strategist at Dunvegan Associates Inc. in Santa Barbara, California, technology companies have been critical to the increased levels of productivity that have sustained the economy's prolonged expansion, he said.


Moore noted that until the past decade, small companies that went public would start out on the Nasdaq - or the over-the-counter market, as it was once called - and then move to the New York Stock Exchange when they grew larger.


But many of the most prominent names in high-tech and Internet stocks - Microsoft, Intel, Cisco, Yahoo!, Amazon.com among many, many others - have remained on the Nasdaq, which has helped the market grow in stature and helped its index surge higher.


The Nasdaq has also been helped by the law of supply and demand. Many companies listed on the Nasdaq market tend to have fewer publicly traded shares, simply because they are young and small. But that means that when investors are anxious to buy the shares, they're willing to bid more and more money to get them.


That's not to say that the Nasdaq heavyweights aren't pulling their weight. Microsoft, Intel and Amazon.com all have billions of shares on the market.


"The large-cap companies are driving it as well as the really newer companies," Rao Chalasani, chief investment strategist at First Union Securities in Chicago, said.


Another factor in the Nasdaq advance is timing - it's the end of the year, and many people with year-end bonuses are putting them into the market. Nasdaq issues are drawing a lot of that money.


The Nasdaq reached 4,001.63 Thursday before slipping back to close at 3,969.44, a gain of 32.14 on the day and 216.38 on the week. Thursday gave the Nasdaq its 13th record close this month; the index is up 81 percent for the year to date.


Meanwhile, the Dow ended the week with a gain of 148.33 and also closed at a new high, 11,405.76, having gained 202.16 Thursday. The Dow is up 24 percent since Jan. 1.


The Standard and Poor's 500 index rose 37.31 over the week and also reached a new closing high, 1,458.34, after rising 22.21 Thursday. The S-and-P has gained more than 18 percent so far this year.