The Associated Press
NEW YORK - The Nasdaq Composite Index burst past 2000 Monday, and the Dow Jones industrials surged more than 120 points as investors shook off concerns about the impact of mad cow disease and looked optimistically toward 2004.
The market also got a lift from early indications that the holiday shopping season had gone well, including a report from MasterCard that consumer spending was up 6.5 percent. Portfolio managers might be looking for more positive news in January, which is typically a good month for the markets, said Brian Bush, director of equity research at Stephens Inc.
"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," Bush said. "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."
The Nasdaq Composite Index closed up 33.34, or 1.7 percent, at 2006.48, its highest point in nearly two years, following a 1.1 percent advance last week. The Nasdaq climbed above 2000 for all of a minute Dec. 3 before falling back and had not closed above 2000 since Jan. 15, 2002, when it stood at 2000.91.
The Dow rose 125.33, or 1.2 percent, to 10,450.00, after gaining 0.5 percent last week. It was the highest close for the index of 30 actively traded industrial stocks since March 21, 2002. The Dow closed above 10,000 for the first time in 18 months Dec. 11.
And the Standard & Poor's 500 index closed up 13.59, or 1.2 percent, at 1109.48, after rising 0.2 percent last week. It was the first time the S&P closed above 1100 in more than 20 months; it last closed higher April 19, 2002, at 1125.17.
"Talk of continued profit gains into 2004 pushed technology, particularly semiconductor stocks, higher," said Donald Keller, chief investment officer, Haberer Registered Investment Advisor, downtown Cincinnati.
The Nasdaq's recovery has been perhaps the most important indicator of the stock market's growing strength. The index, decimated in the three-year bear market, has regained 80.1 percent since it hit a six-year low of 1114.11 Oct. 9, 2002.
While it still has more than 3,000 points to regain before it can reach its all-time closing high of 5048.62, no one really thinks the Nasdaq should return to that overinflated level anytime soon.
Trading was light as many investors took the last week of the year off. But mutual fund managers and other institutional investors were engaged in some end-of-the-quarter window dressing, the practice of adding to portfolios to make them look more impressive in reports to shareholders.
With Wall Street carrying its solid recovery into the final days of 2003, many managers were eager to get as many winning stocks into their portfolios as possible. Investors' spirits have been buoyed for several months by generally strong economic news. Now the focus will be on how companies perform, said Tim Smalls, a trader with SG Cowen Securities.
"The driving force is corporate earnings. ... That's it in a nutshell," Smalls said.
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