The Nasdaq composite index burst past the 2,000 milestone today 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%.
Portfolio managers may 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.
“Even with a heightened terror alert, the onset of mad cow for the first time in the US, 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.”
According to preliminary calculations, the Nasdaq composite index closed up 33.34, or 1.7%, at 2,006.48, its highest point in nearly two years, following a 1.1% advance last week. The tech-dominated Nasdaq climbed above 2,000 for all of a minute on December 3 before falling back, and had not not closed above 2,000 since January 15, 2002, when it stood at 2,000.91.
The Dow rose 125.33, or 1.2%, to 10,450.00, after gaining 0.5% last week. It was the highest close for the index of 30 actively traded industrial stocks since March 21, 2002, when it ended the day at 10,479.84. The Dow closed above 10,000 for the first time in 18 months on December 11.
And the Standard & Poor’s 500 index closed up 13.59, or 1.2%, at 1,109.48, after rising 0.2% last week.
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 anxious 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. “A good first quarter could take us to the next level in 2004.”