The Nasdaq topped 4,000 on Monday, its highest level in 13 years.
The tech-heavy index gained 11 points, or 0.3%, to reach 4,003 shortly after the opening bell amid a broad-based rally that also sent the Dow and S&P 500 higher. The Nasdaq peaked at 4,007.09, before shedding some gains and ending the session up 2.92 points, or 0.07%, at 3,994.57.
The Nasdaq flirted with the 4,000 threshold last week, closing at 3,991.64, up 0.14%, or 6 points. Year to date, the benchmark is up a whopping 32.20%.
At 4,000, the Nasdaq stokes some painful memories: After the composite hit 4,000 in the beginning of 2000, it climbed another 25% to top out just above 5,000 - then plunged 78% in 10 months to 1,114 as the tech bubble burst.
But, things are different this time around...Nasdaq at 4,000: Now the Same as Before
Monday's Nasdaq move fueled the ongoing concerns that we're in a tech bubble.
However, today's Nasdaq looks very different from its dot-com heyday. The composite is a more mature and diversified version of its former self.
Back in 2000, tech was the main driver of the Nasdaq. Today, it's equities outside of tech that are juicing the benchmark.
Leading the gains are some high-flying biotechs.
The Nasdaq Biotechtechnology Index is up an astonishing 67.80% so far in 2013. Helping the healthy run are large-cap bios like Celgene Corp. (Nasdaq: CELG), up roughly 105% since January, and Biogen Idec Inc. (Nasdaq: BIIB), up nearly 100%.
Meanwhile, some of Nasdaq's most popular tech stocks' year-to-date gains pale in comparison.
One-time dot-com darlings such as Cisco Systems Inc. (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC), which dominated the Nasdaq a decade ago, have done little to boost the index in 2013. Cisco started the year at $20.12, and currently changes hands at $21.26. Intel entered 2013 at $21.15, and presently trades at $23.75.
Blame the limping U.S. economy, Obamacare, and the ailing Eurozone region for the reluctance among a number of companies to make sizable IT investments.
"You have a lot of companies very hesitant to deploy capital or commit to deploying capital," Dane Leone, head of equity strategy at investment bank Macquarie, explained to The Wall Street Journal. "Tech benefits when companies put more money into IT."
Plus, a closer look at the Nasdaq shows this is not bubble territory...
As our Defense & Technology Specialist Michael A. Robinson said last week, if you look at the Nasdaq's price, it's trading at 18 times forward earnings. That compares to 18.5-times earnings for the Dow Industrials.
He gives investors some tech investing tips in this video below...
So with the Nasdaq at a 13-year high, what's next for the index - and for tech?Where Nasdaq and Tech Are Headed
With global economies showing some real signs of sustained improvement, tech spending is likely to pick up next year. This will add to the gains the Nasdaq sees in its non-tech components and keep pushing the index higher.
As the global economy starts to recovery, there is an urgent need to upgrade technologies to avoid security and compliance risks, as well as to stay current and competitive. Tech analysts at Credit Suisse project a boom in technology spending in the next four years as corporations start to spend some of their $1.5 trillion cash hoard to purchase new software, servers, and PCs.
Additionally, technology industry research firm Gartner predicts growth in enterprise technology spending next year with rise to 3.6%, more than double the 1.7% spent in 2013. Gartner forecasts it will keep rising, increasing to 4.1% in 2015 and 4.2% in 2016.
That's why the Nasdaq at 4,000 won't be the end of this run...
Profit alert from those in the know: Three "Insider" Stocks to Buy Now
S&P 500 Edges Lower, but Dow Ekes Out Gains
S&P 500 Retreats from Record Amid Iran Nuclear Deal
- The Wall Street Journal:
Nasdaq Touches 4,000 on Mixed Day