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By Akane Otani 

The Nasdaq Composite index vaulted above 8000 for the first time Monday, underscoring the dominant role megacap technology shares have played in propelling the U.S. stock market past its global peers this year.

It took the index just short of eight months to climb a thousand points after crossing 7000 in January -- a pace unmatched since around the height of the dot-com era, when the Nasdaq jumped from 4000 to 5000 in just 49 trading days.

Before Monday, the last time the Nasdaq had crossed two thousand-point milestones in a single year was 1999, when a fervor for tech stocks sent a score of dot-com ventures surging higher before a precipitous crash.

Nearly two decades later, technology stocks are surging again, with online-streaming giant Netflix Inc. soaring 90% this year, Amazon.com Inc. climbing 65%, Microsoft Corp. advancing 28% and Google parent Alphabet Inc. rising 19%.

Yet while investors have drawn plenty of parallels between the tech rally of the '90s and now, many are reluctant to call it quits on the technology sector.

Corporate earnings are growing at the fastest pace in years. Many of the technology titans, including Amazon.com and Microsoft, have upended investors' expectations this year and continued to post soaring profits.

More broadly, the U.S. economy looks strong, a factor that has propelled not just the tech-heavy Nasdaq but the S&P 500, the Russell 2000 index of small-capitalization companies and the Dow Jones Transportation Average to new records this month.

The broad gains, as well as a more upbeat economic outlook, are helping investors justify the tech sector's rich valuations for now -- even as some have grown increasingly nervous that the group could be overdue for a pullback. Monday's news that the U.S. and Mexico had reached a trade agreement after months of protracted negotiation also helped send stocks broadly higher.

The Nasdaq rose 72 points, or 0.9%, to 8017.90 Monday, notching its 27th record close of the year.

With its 16% gain in 2018, the Nasdaq has nearly doubled the S&P 500's advance. If it holds its lead through the end of the year, it will have outperformed the broad index for the eighth year in 10, a reflection of investors' growing appetite for tech stocks throughout the latest leg of the bull market.

Yet the Nasdaq's milestone is far from its biggest, mathematically speaking. The index had to climb 100% to get from 1000 to 2000 in 1998, 50% to get to 3000 in 1999 and 33% to hit 4000 the same year. Its latest thousand-point advance required a relatively diminutive 14% gain.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

August 27, 2018 17:47 ET (21:47 GMT)

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