Tech Stocks Roar Again in Faint Echo of 2000
October 27 2017 - 5:58PM
Dow Jones News
By Chris Dieterich
For one day at least, it felt like 2000 again in the U.S. stock
market.
A swell of enthusiasm for shares of America's best-known
technology and internet companies carried the Nasdaq Composite
Index to another record, up 2.2% in its biggest one-day point gain
since August 2015.
The headiest gains were in Amazon.com Inc., Google parent
Alphabet Inc., Microsoft Corp. and Intel Corp. The surge in those
shares added a collective $146 billion in market value to the
companies. That one-day rise eclipsed the entire value of
International Business Machines, at $143 billion.
Investors cheered buoyant quarterly earnings of each company,
bidding up stocks on the hope that fast-growing e-commerce,
cloud-computing and digital advertising businesses would continue
to grow in importance.
Eye-watering gains caught some seasoned market watchers off
guard. Some said the huge advances could reflect confidence that is
out of whack with even the most optimistic forecasts.
"Today is the craziest behavior I have seen since early 2000,"
said Michael O'Rourke, chief investment strategist at JonesTrading
Institutional Services, referring to the year in which the internet
boom crested with the Nasdaq hitting 5000, a level it quickly
relinquished and wouldn't regain for more than a decade. "It can
only be described as euphoria."
More days like Friday could signal the beginning of a new phase
in the stock-market rally that has for months been characterized by
a steady, persistent grind higher, albeit to record highs, Mr.
O'Rourke said. This year, the Dow industrials are up 19% and the
Nasdaq has climbed 24%.
Big gains in tech stocks invite comparisons with the bubble that
crunched the Nasdaq nearly two decades ago. Bulls say that the key
difference between then and now is that whereas tech-stock gains
then were premised on the idea that the internet would change
people's lives, this one is based on the reality that these
companies already are.
"These big web giants are changing the ways people socialize,
consume content, work and play," said Daniel Flax, senior analyst
at Neuberger Berman. "You're seeing outsize revenue because they
are at once going into new areas and disrupting industries."
As the broader U.S. stock market continues to notch all-time
highs, investors are showing an affinity for ubiquitous brands tied
to the web. On Friday, the Nasdaq notched its 61st record close of
the year, matching its 1999 performance and one short of its 1980
record.
Amazon.com surged 13%, or $128.52 a share, to $1,100.95 in its
biggest one-day gain in more than two years. The internet
retailer's quarterly revenues hit a record, and its cloud-computing
unit increased sales by 42% from the year earlier.
Microsoft surged 6.4% to a record high as the software stalwart
continues to reap the benefits of its cloud-computing business.
Alphabet jumped 4.3%, also to a record high after its profits
spiked 33% as the company's ads on the web and smartphones
proliferate.
Upbeat quarterly earnings routinely jolt stock prices higher,
particularly in the technology and internet sector, but Friday's
tech-focused buying rewarded recent market darlings and legacy
contenders alike.
Even Intel, a chip maker yet to regain its all-time highs
reached in the heat of the dot-com bubble, darted up 7.4% to its
highest level since 2000 after lifting its financial forecasts for
the rest of the year, a broad show of strength for the sector.
Optimism spilled into other big technology stocks as well, with
Apple Inc., the hardware company that is the largest U.S. company
by market value, rising 3.6%. Facebook Inc., due to report its next
quarterly results Wednesday, rose 4.3% Friday to notch a high.
All told, tech stocks in the S&P 500 soared 2.9%, their
biggest one-day ascent since March 2016.
Write to Chris Dieterich at chris.dieterich@wsj.com
(END) Dow Jones Newswires
October 27, 2017 18:43 ET (22:43 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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