By Matthew
Klein | Wednesday, September 2
Nasdaq
12,000! It was a banner day for
U.S. stocks on the last Wednesday before Labor Day, with the S&P
500 gaining 1.5% to hit its 22nd record
high for the year. Since the start of 2020—a year that historians will likely
remember, if at all, for a devastating global pandemic and an unprecedented
economic downturn—the prices of American large-cap stocks have risen 11%.
Today’s
gains were exceptionally broad based, with 458 of the index components ending
higher. There wasn’t any obvious catalyst for the price gains, although there
was some
encouraging news about treatments for the coronavirus.
The losers
were overwhelmingly concentrated in the oil and gas sector: Diamondback
Energy, Marathon
Oil, Apache, EOG
Resources, and Concho
Resources were the five worst performers of the day,
and energy was the only one of the S&P’s 11 sectors that didn’t rise.
On the other
side, the biggest winners represented a diverse range of companies including
the maker of Jack Daniel’s, a dental
equipment manufacturer, Kansas City
Southern, and Twitter. At the
sector level, the biggest winners were utility stocks, followed by materials,
real estate, communication services, and health care.
European
stocks did even better, with the German DAX and French CAC-40
both up 2% on the day. The global optimism
wasn’t reflected in other asset prices, with Treasury yields flat, rising
spreads between German and Italian government bonds, the dollar higher, and
precious metals prices edging lower.
Fans of
round numbers, however, were perhaps most impressed by the performance of the
Nasdaq Composite, which
breached the 12,000 level for the first time—just 19 trading days after
crossing 11,000 in early August and only a few months after surmounting the
10,000 level in mid-June. The Nasdaq has had its 43rd record close this year,
up 1% today and up 34% since January. Traders were marking Nasdaq 7,000 for
the first time as recently as January 2, 2018.
To put some
perspective on this remarkable performance, recall that Kevin Hassett and Jim
Glassman published Dow 36,000 in 1999. Back then, the Dow
Jones Industrial Average was trading around 10,000. That price was
elevated, but the bias of the index toward old-economy companies shielded it
from both the tech bubble and tech bust.
Fast forward
21 years and the DJIA is trading at 29,100.50, which should give you a sense
of how ludicrous the Hassett/Glassman price target was, especially
considering they expected their prediction to come true by 2004 at the
latest. Yet the Nasdaq, which was in the midst of an historic bubble in 1999,
has nevertheless quadrupled from its level back then.
 |
DJIA: +1.59% to 29,100.50
S&P 500: +1.54% to 3,580.84 Nasdaq: +0.98% to 12,056.44
The Hot
Stock: DXC Technology +11.6%
The Biggest Loser: Diamondback Energy -5.6%
Best Sector:
Utilities +3.1%
Worst Sector: Energy -0.5%  |
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