NASDAQ hits all-time high


— NEW YORK (AP) The Nasdaq composite index extended its record-setting gains today, further eclipsing the 4,000 milestone as Wall Street's fascination with technology stocks persisted.

The index was up 25.11 at 4,066.57 in quiet trading today. On Wednesday, the Nasdaq rose 69.35 points to close at 4,041.46.

Once viewed as a second-rate home for small companies, the index is now up more than 84 percent for the year, a record pace for a major U.S. market index. The previous record for an annual gain was set back in 1915 when the Dow Jones industrial average rose 82 percent.

In contrast, the Dow is up 25 percent this year and the broadly based Standard & Poor's 500-stock index is up 19 percent.

The Nasdaq crossed its latest milestone less than two months after closing above 3,000 for the first time. It took the Dow nearly four years to rise from 3,000 to 4,000, from April 1991 to February 1995.

Even in a raging bull market, the Nasdaq's velocity has astounded Wall Street professionals.

''The Nasdaq has not only defied gravity, it has defied investors' wildest dreams,'' said Alan Ackerman, senior vice president at Fahnestock & Co. in New York.

The Nasdaq composite, which began trading Feb. 5, 1971, reflects the performance of the more than 5,000 stocks listed on the Nasdaq Stock Market. The market was once home mainly to young and untested companies that moved on to the New York Stock Exchange as they became successful.

However, as high-tech companies such as Microsoft and Intel have grown into corporate behemoths, many have decided to stay put.

The Nasdaq bounded higher this year as investors poured money into the technology sector. Among those posting stellar gains were Microsoft, Oracle and other software makers, and networking companies like Cisco Systems. Qualcomm, a developer of cell-phone technology, has seen its shares soar more than 2,000 percent.

But above all, investors coveted shares of any company poised to take advantage of the Internet, whether by selling goods over it or building parts to make it faster or more efficient.

''Electronic commerce in general and the Internet in particular has largely fueled the spectacular rise in technology stocks,'' said Theresa Hamacher, chief investment officer at Pioneer Investment Management Inc.

The new prominence of Internet companies has changed the way many Wall Street professionals view stocks. Companies have surged higher even though their losses grew as money was channeled into future growth.

The Nasdaq's leading role on Wall Street also has contributed to extraordinary volatility. While a price swing of $3 or more means a big day for a Dow Jones industrial stock, it's not unusual for Nasdaq issues to soar or swoon $20 in a single session.

The Nasdaq's speedy ascent has been hastened by the large number of retail investors, those who generally buy stocks in lots of 100 shares or fewer. Hamacher suggested that ordinary folks, who rely ever more on computers and the Internet to do their trading, are charmed by the power of technology.

Still, analysts point out that many Nasdaq stocks aren't making money for investors. The index's stunning gains were driven largely by its biggest, hottest stocks, while others languished.

After the unprecedented gains of 1999, analysts are divided over the Nasdaq's likely course in 2000.

If the market faces higher interest rates as the Federal Reserve continues its effort to keep inflation under control, technology stocks could be the first to suffer. Higher rates cut into corporate bottom lines as it becomes more expensive to borrow.

But technology stocks could thrive if Asian and Latin American nations continue to recover from financial crises of 1998. Many could also benefit from a fresh wave of technology spending once Y2K computer concerns are gone.

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