NASDAQ ends at record over 6,000, 17 years after breaking 5,000 in the dotcom boom

PUBLISHED : Wednesday, 26 April, 2017, 4:43am
UPDATED : Wednesday, 26 April, 2017, 4:43am

The Nasdaq Composite hit a record high on Tuesday, while the Dow and S&P 500 brushed against recent peaks as strong earnings underscored the health of corporate America.

The technology-heavy Nasdaq Composite broke the 6,000 barrier for the first time, 17 years after it first reached 5,000 during the height of the dotcom boom. The index was boosted by technology giants such as Amazon, Apple, Microsoft, Google and Facebook, which will be among the main beneficiaries of any Trump tax reforms.

The president’s long-awaited announcement is now expected on Wednesday, with suggestions of a cut in corporation tax from 35 per cent to 15 per cent and possible reductions in income tax rates, particularly for middle-income earners.

The Nasdaq Composite added 41.67 points, or 0.7 per cent, to finish at 6,025.49.

The Dow Jones Industrial Average rose 232.23 points, or 1.12 per cent, to close at 20,996.12, the S&P 500 gained 14.46 points, or 0.61 per cent, to 2,388.61.

“It’s earnings coming from the Dow companies, the largest of the large, in particular Caterpillar, really driving on the theme that US corporate profitability is on track to provide some significant year-over-year earnings growth. That in and of itself is a fantastic story,” said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.

Caterpillar was up 7.7 per cent at US$104.29 after earlier hitting a multi-year high of US$104.71 and McDonald’s jumped 5.6 per cent to US$141.72, both after beating profit estimates.

Overall profits of S&P 500 companies are estimated to have risen 11 per cent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.

The Nasdaq hit a record level of 6,036.02, breaching 6,000 for the first time, powered by gains in index heavyweights Apple and Microsoft.

The index first touched the 5,000 mark in March 2000 as tech stocks bubbled before tumbling nearly 80 per cent through October 2002.

“(Treasury Secretary Steven) Mnuchin has to have a better-articulated answer to what the tax code changes are in a meaningful way,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

She said cutting taxes on partnerships and owner-operated businesses would be a strong boost to investing.

Global stocks and euro rally as market favourite Macron wins first round of voting in France

Tuesday’s gains built on a day-earlier rally, which was driven by the victory of centrist candidate Emmanuel Macron in the first round of the French presidential election. Polls showed Macron, the market’s favourite, was likely to beat his far-right rival Marine Le Pen in a deciding vote on May 7.

Joshua Mahony, a market analyst at IG, said: “US markets are leading the way higher, as the excitement over Donald Trump’s corporate tax cuts takes the mantle from the French elections ... Despite the optimism of Trump’s tax plan, we are seeing the foreign exchange trends [from Monday] come back into play, with extended gains for the euro ahead of Thursday’s ECB meeting.

“While much of the focus has been upon a rate-raising Fed, the political cloud that is gradually being lifted over the eurozone is likely to start putting pressure on [ECB president Mario] Draghi and Co.”