Nasdaq 100 closes at 15-year high as August’s tumble is erased
Another step in the recovery from this summer’s equity meltdown occurred Monday as a rally in U.S. stocks pushed the Nasdaq 100 Index above its July high and toward record territory.
The index’s 1.1 percent advance Monday moved its rally from an August trough to 17 percent, making it the first major index of U.S. stocks to retake a multiyear high established earlier in 2015. As of Monday’s close, the Standard & Poor’s 500 Index was more than 1 percent from its May 21 peak of 2,130.82, while the Dow Jones Industrial Average was more than 2.5 percent away from its last record.
While the broader Nasdaq Composite Index eclipsed its dot-com peak in April, its 100-stock sister index fell just short and closed Monday less than a point below its record on March 27, 2000. For 2015, the Nasdaq 100 has jumped 11 percent, extending its gain from the end of 2011 to 106 percent.
Gains in the index have come in its biggest computer and software companies. Since the Aug. 25 low, Amazon.com Inc. is up 35 percent, Intel Corp. has rallied 32 percent and Facebook Inc. has jumped 24 percent. The index’s biggest member, Apple Inc. with a 12.9 percent weighting, has jumped 17 percent.
“Some of the markets leaders like biotech and broader health-care didn’t come back as quickly, and today they’re starting to roar back again,” said Randy Warren, who manages more than $100 million at Exton, Pennsylvania-based Warren Financial Service & Associates Inc. “The selloff that we saw was a normal, healthy pullback for the market that didn’t seem to scare too many people off and ultimately served as a buying opportunity.”
The S&P 500 added 1.2 percent to 2,103.94 at 4 p.m. in New York, rising to within 1.3 percent of its record set in May. The Dow Jones Industrial Average gained 164.88 points, or 0.9 percent, to 17,828.42.
A reading today showed U.S. manufacturing remained stuck in neutral in October as factories struggled with dwindling overseas demand and well-stocked customers at home. Official data earlier showed Chinese factory output shrank for a third month, contrasting with a report signaling a pickup in euro-area manufacturing.
The October payrolls report due on Friday will begin to loom larger on investor sentiment as the week progresses. Economists surveyed by Bloomberg project the economy added 182,000 jobs last month, up from Septembers 142,000, with the unemployment rate slipping to 5 percent from 5.1 percent a month earlier.
“The global data today shows stable economic conditions, which is improving sentiment,” said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “M&A activity is always a good litmus test for the sentiment of companies and usually speaks well to market conditions, and we’ve seen some big deals lately.”
Equities rallied the most since 2011 in October and are riding their longest streak of weekly gains since December, bolstered in part by central banks as the Fed kept rates pinned near zero, while signs of weak growth prompted the European Central Bank last month to hint at potential extra measures. In Asia, China unexpectedly cut its lending rate and Bank of Japan maintained record stimulus.
The S&P 500 is up 13 percent from an August low as equities recover from a third-quarter swoon triggered by concern that weakening growth in China would spread. An earnings season that hasn’t been as bad as analysts initially predicted also helped the benchmark erase a loss for the year.
More than 100 companies in the S&P 500 are scheduled to announce earnings this week. Of those that have released results this season, about 75 percent exceeded profit projections, while 55 percent missed sales forecasts. Analysts estimate earnings dropped 3.9 percent in the third quarter, up from predictions for a 6.1 percent decline a week earlier.