Dec. 30–It’s not quite as momentous as the Dow pushing past 10,000, but the Nasdaq Stock Market set its own milestone Monday, topping 2,000 for the first time in nearly two years.
The tech-heavy Nasdaq soared and swooned along with the Internet economy. It briefly topped 5,000 in March 2000 before bottoming out at 1,114 last year.
While its climb offers hope for investors, skeptics warn against reading too much into the Nasdaq’s rebound. After all, investors who bought during the dot-com bubble are far from recovering their losses.
“The Nasdaq is still down 60-odd percent from its all-time peak,” said Palm Beach hedge fund manager Doug Kass. “The Dow is only down 12 or 13 percent. The Nasdaq is just playing catch-up.”
The Nasdaq rose 33 points Monday to close at 2,006.48. It last closed above 2,000 on Jan. 15, 2002, when it stood at 2,000.91.
For investors like Robert Gaynor, once a fan of Yahoo! and other high fliers, the Nasdaq’s rebound takes some of the sting out of the dot-com collapse. Gaynor, a Palm Beach County podiatrist, held onto his tech mutual funds and his shares of Intel through last year’s lean times, although he wasn’t brave enough to start pouring cash into tech stocks when they began to come back.
“Nobody had the gall to put money back into the market after they lost it all,” Gaynor said.
Meanwhile, the Dow Jones industrial average surged 125 points to close at 10,450.00. The Dow earlier this month topped 10,000 for the first time in 18 months. The Standard & Poor’s 500 index also rose, closing at 1,109.48. The across-the-board rise left some institutional investors convinced that this rebound is real.
“Even with a heightened terror alert, the onset of mad cow for the first time in the U.S., throughout all of that, the market has continued to move higher,” said Brian Bush, director of equity research at Stephens Inc. “If you’re a portfolio manager, you’ve had a great year, the first up year in three, and the outlook for ’04 looks good…. You’re probably looking to make some bets going into the new year.”
But Kass and others warned that the end of the year creates artificially bullish conditions. For one thing, trading is light between Christmas and New Year’s Day, making for an “easily manipulated” market, Kass said.
Bears like Kass see another tech bubble building. And with the dollar weakening, he suggests investors sell stocks to take advantage of the recent run-up. “I would counsel people to take profits,” Kass said.
But optimists see reason to buy stocks. “It’s going to be a pretty good year” for stocks in 2004, said Sunil Reddy, manager of the Fifth Third Technology Fund. “I wouldn’t be surprised to see a double-digit increase.”
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(c) 2003, The Palm Beach Post, Fla. Distributed by Knight Ridder/Tribune Business News.
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