Historical Stock Chart
3 Months : From Jul 2018 to Oct 2018
By Michael Wursthorn
The Nasdaq Composite Index notched its eighth straight session of gains Thursday, shrugging off declines in the other major U.S. stock indexes in the latest sign that investors are retaining their faith in major technology firms.
The 3.46-point gain took the Nasdaq to 7891.78, just 41 points shy of its record set last month. In part, investors have been seeking out shares of technology companies as a haven from the continuing trade tensions between the U.S. and China and other major trade partners.
In addition, valuations across the market have come down following another strong quarterly earnings season, though price/earnings ratios in general remain in a range that has been seen only rarely in previous market cycles. (Please see related article on B12.)
With 82% of S&P 500 tech companies having reported results, second-quarter earnings have risen 32% from the same period a year earlier -- a growth rate that is nearly on par with the first quarter of 2018.
"As long as the economy can keep growing and spending on technology and software is buoyant, I'd expect the tech sector to sustain these levels, " said Dan Morgan, a portfolio manager with Synovus Trust.
The Nasdaq index became synonymous with pricey tech stocks during the internet boom of the late 1990s, but its advance to dozens of records in recent years has been fueled by a handful of companies generating significant recurring growth in profits and revenue -- and, in many cases, exerting a strong competitive hold on lucrative industries such as media and retail.
Many investors are banking that further gains in the Nasdaq will be driven in part by the mettle of firms such as Apple Inc., which this month became the first U.S. company to sport a $1 trillion market value, and Amazon.com Inc., which accounts for nearly half of U.S. online sales. On Thursday, Apple rose $1.63 to $208.88 and Amazon added $12 to $1,898.52.
Not all of those companies have kept moving up in lockstep: Both social-media company Facebook Inc. and streaming-video provider Netflix Inc. suffered double-digit share-price declines in the past month following earnings that were deemed disappointing by Wall Street.
At the same time, many investors are taking heart that the perceived stumbles at those firms haven't slowed tech's momentum in the market. For the year, the Nasdaq is up 14%, among the best performances in markets this year. That is more than double the 6.7% gain for the S&P 500 and the 3.2% advance for the Dow Industrials.
On Thursday, the S&P lost 0.1% and the Dow dropped 0.3%.
(END) Dow Jones Newswires
August 09, 2018 19:00 ET (23:00 GMT)
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