Tech Stocks Roar Again in Faint Echo of 2000

By Chris Dieterich Features Dow Jones Newswires

For one day at least, it felt like 2000 again in the U.S. stock market.

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A swell of enthusiasm for shares of America's best-known technology and internet companies carried the Nasdaq Composite Index to another record, up 2.2% in its biggest one-day point gain since August 2015.

The headiest gains were in Amazon.com Inc., Google parent Alphabet Inc., Microsoft Corp. and Intel Corp. The surge in those shares added a collective $146 billion in market value to the companies. That one-day rise eclipsed the entire value of International Business Machines, at $143 billion.

Investors cheered buoyant quarterly earnings of each company, bidding up stocks on the hope that fast-growing e-commerce, cloud-computing and digital advertising businesses would continue to grow in importance.

Eye-watering gains caught some seasoned market watchers off guard. Some said the huge advances could reflect confidence that is out of whack with even the most optimistic forecasts.

"Today is the craziest behavior I have seen since early 2000," said Michael O'Rourke, chief investment strategist at JonesTrading Institutional Services, referring to the year in which the internet boom crested with the Nasdaq hitting 5000, a level it quickly relinquished and wouldn't regain for more than a decade. "It can only be described as euphoria."

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More days like Friday could signal the beginning of a new phase in the stock-market rally that has for months been characterized by a steady, persistent grind higher, albeit to record highs, Mr. O'Rourke said. This year, the Dow industrials are up 19% and the Nasdaq has climbed 24%.

Big gains in tech stocks invite comparisons with the bubble that crunched the Nasdaq nearly two decades ago. Bulls say that the key difference between then and now is that whereas tech-stock gains then were premised on the idea that the internet would change people's lives, this one is based on the reality that these companies already are.

"These big web giants are changing the ways people socialize, consume content, work and play," said Daniel Flax, senior analyst at Neuberger Berman. "You're seeing outsize revenue because they are at once going into new areas and disrupting industries."

As the broader U.S. stock market continues to notch all-time highs, investors are showing an affinity for ubiquitous brands tied to the web. On Friday, the Nasdaq notched its 61st record close of the year, matching its 1999 performance and one short of its 1980 record.

Amazon.com surged 13%, or $128.52 a share, to $1,100.95 in its biggest one-day gain in more than two years. The internet retailer's quarterly revenues hit a record, and its cloud-computing unit increased sales by 42% from the year earlier.

Microsoft surged 6.4% to a record high as the software stalwart continues to reap the benefits of its cloud-computing business. Alphabet jumped 4.3%, also to a record high after its profits spiked 33% as the company's ads on the web and smartphones proliferate.

Upbeat quarterly earnings routinely jolt stock prices higher, particularly in the technology and internet sector, but Friday's tech-focused buying rewarded recent market darlings and legacy contenders alike.

Even Intel, a chip maker yet to regain its all-time highs reached in the heat of the dot-com bubble, darted up 7.4% to its highest level since 2000 after lifting its financial forecasts for the rest of the year, a broad show of strength for the sector.

Optimism spilled into other big technology stocks as well, with Apple Inc., the hardware company that is the largest U.S. company by market value, rising 3.6%. Facebook Inc., due to report its next quarterly results Wednesday, rose 4.3% Friday to notch a high.

All told, tech stocks in the S&P 500 soared 2.9%, their biggest one-day ascent since March 2016.

Write to Chris Dieterich at chris.dieterich@wsj.com

(END) Dow Jones Newswires

October 27, 2017 18:43 ET (22:43 GMT)