Wall Street Beat: Tech pushes Nasdaq to 18-month high

18.03.2010
Growing confidence has pushed the value of IT company shares up to levels not seen since late 2008, when the implosion of Wall Street sucked the air out of credit markets and dried up technology sales.

The tech-heavy Nasdaq hit an 18-month high Thursday, closing at 2391, its highest point since the end of August 2008. The broader Dow Jones industrial average and the Standard & Poor's 500 Stock Index rose to 17-month highs.

Lehman Brothers filed for bankruptcy 18 months ago this week, on Sept. 15, 2008. In the wake of the bank's failure, the financial industry and virtually all stock exchanges went into a tailspin. Tech companies suffered along with businesses in every sector.

This week, good macroeconomic news had a lot to do with the across-the-board market increases. For example, the Labor Department Thursday eased inflation fears with a report that its Consumer Price Index for February was flat, following a 0.2 percent increase in January. The Labor Department also said in a separate report that initial claims for state unemployment benefits fell 5,000 in the week to March 13. Earlier in the week, the Federal Reserve Board said its federal funds rate would remain near zero at least for the short term, in a sign that it still wants to keep interest rates low, a move that encourages lending and spending.

Tech vendors, however, have been helped by a steady stream of upbeat IT-specific news, and have led other sectors in the recovery from recession lows of a year ago. Nasdaq computer stocks are up by 73 percent in the past 12 months, while telecom stocks have jumped 53 percent during the same period. In comparison, the broader Dow Jones composite has risen 44 percent in the past 12 months.

This week, ABI Research issued a report on smartphone shipments that showed unexpected strength for the fourth quarter of 2009.