The Nasdaq Composite Index returned to record levels earlier this week, erasing all the losses it suffered in a recent decline. But while that all-time high was, in a sense, historic — though the index has hit dozens of records over the past year — it also represented a bigger milestone than investors may have realized.
On an inflation-adjusted basis, the Nasdaq’s COMP, +0.00% recent peak allowed it to finally surpass 5,048.62, the record it touched at the top of the dot-com bubble in March 2000. It hit that milestone in late February and subsequently exceeded it, though it has since pulled back a bit.
“Adjusted for inflation, the Nasdaq is only 2.0% above the peak in 2000. That comes out to a whopping annualized return of 0.10% over the past 18 years. When someone says tech is in a bubble this chart screams that it is anything but,” wrote Ryan Detrick, senior market strategist at LPL Financial, which compiled this data.
So far this year, the Nasdaq has been by far the best performer of the major indexes. It is up 8.5% (not on an inflation-adjusted basis) compared with the 2.8% rise of the S&P 500 SPX, +0.17% . The Dow Jones Industrial Average DJIA, +0.29% is up about 0.1%.
The Nasdaq’s rally has largely come on the back of large-capitalization internet and technology companies. The technology sector is up 10.2% so far in 2018 and up 36% over the past 12 months, making it the top-performing S&P 500 sector over either period. Among the notable gainers, Amazon.com Inc. AMZN, -0.67% has rallied 36% in 2018 and Netflix Inc. NFLX, -0.82% is up 68%.
The Nasdaq’s tech-heavy focus has allowed it to avoid much of the market’s recent volatility, which came on concerns over trade protectionism and tariffs, two factors seen not having a big impact on tech.
The S&P 500 index declined for a fourth straight session, representing its longest such stumble in 2018. The broad-market index was weighed by selling in consumer-discretionary and energy and materials sectors, the weakest groups of the index’s 11, even as U.S. crude-oil futures CLJM settled higher for a second session in row. The fourth declining session marks the S&P 500‘s longest string of losses since the four-session slide ended Dec. 6, 2017, according to Factset data. Meanwhile, the Dow Jones Industrial Average [: DJIA] closed out Thursday in the green, up 115 points at 24,873, snapping its three-session skid. The Nasdaq Composite Index COMP, +0.00%meanwhile, finished lower, down 0.2% at 7,481, logging its third fall in succession. The stock market pared firmer gains in midday trade Thursday following a report that Special counsel Robert Mueller subpoenaed the Trump Organization to turn over documents, including some related to Russia, the New York Times reported Thursday, citing two people briefed on the matter.
U.S. stocks mostly closed lower on Thursday, as uncertainty surrounding President Donald Trump’s protectionist stance on trade policy weighed on sentiment, although gains in a few market bellwethers kept the Dow from a fourth straight decline. Based on preliminary closing figures, the Dow Jones Industrial Average DJIA, +0.29% rose 116 points, or 0.5%, to 24,874. Among the biggest gainers in the blue-chip average, Goldman Sachs Group Inc. GS, +0.37% rose 0.8% while McDonald’s Corp.MCD, +0.46% was up 2.1%. The S&P 500 SPX, +0.17% fell 2 points, or 0.1%, to 2,747. The day represents the benchmark index’s fourth straight daily decline, its longest such streak since December. The Nasdaq Composite Index COMP, +0.00% fell 15 points, or 0.2%, to 7,482, closing lower for a third straight session. Worries are persisting this week about a potential global trade war after Trump said Wednesday his administration will seek to trim the U.S.’s trade deficit with China by $100 billion. The announcement follows comments the previous day that he wants to impose up to $60 billion in tariffs on Chinese goods.