Nasdaq 5,000 in short reach

Since then, it’s been mostly up, up and away for technology investors sloshing money around between typical bellwethers, computer-chip leaders and previously unknown biotechs. On Wednesday, the composite index broke 4,700 and early Thursday, it hit 4,800. "That is such an incredible level of performance, not only relative to itself but to its peers and the other indices," said Scott Bleier, chief strategist at Prime Charter Ltd.

"Everybody wants to own the same stocks and money managers are being forced to jettison the old line and buy the new age," he said. "It’s just fuelling the continued upward movement in Nasdaq."

But, as with all future moves in the stock market, when the index will pierce 5,000 is still up in the air. Given its momentum and the fact that the market’s bullish sentiment towards anything Nasdaq remains unabated, many analysts say the index could fly through the milestone as early as this week. "Oh, I think we are going to see it," said Gregory Nie, technical analyst at First Union Securities Inc. "We’re this close and with the volatility that’s been exhibited in the past, it could be as little as a day or two away."

Nasdaq’s recent push has been led by what some market watchers are calling the second and third-tier stocks – names that have long been ignored but could be tomorrow’s big winners. Biotechnology stocks have staged the most spectacular advance, helping lead the tech-driven Nasdaq more than 800 points higher in just eight weeks. While the composite has climbed 17 per cent this year, the Nasdaq biotech index has gained an unprecedented 73 per cent.

"The small-cap growth category had been a neglected grouping terms of asset allocation," said Riley. "But clearly, the small-cap field has started to gain recognition in portfolios and the rotation has been vicious."

That rotation into small-time stocks has also lifted the Russell 2000 index to new highs while the blue-chip Dow Jones industrial average has lagged. The Dow is down 11 per cent this year while the Russell, featuring smaller stocks, has risen 16 per cent.

Investors are buying many of the hot new biotech and Internet names based on hopes of future earnings and corporate successes, not real-time financial results. "There are no earnings worries to burden many of these stocks," Bleier said. "People want the next 30-point gainer."

Still, data showing a strong-as-ever US economy may weigh on Wall Street as worries that the Federal Reserve will aggressively hike interest rates penetrate the market. "There’s going to be some sense that there is still great pressure coming and the Fed is going to raise rates," said Joseph Battipaglia, chief investment officer at Gruntal & Co, who pegged Nasdaq at hitting 5,000 by year-end.

Technology stocks, particularly these high-flying biotechs and Internet names, have appeared nearly immune to the rate worries that plague the broader market. Still, Battipaglia contends that eventually, tech companies will become sensitive to the pressure.

"We’ll have corrections," said Battipaglia, noting that Nasdaq twice dropped 10 per cent from its highs in January. "But they’ll be short and quick and we’ll rebound and go higher." Lofty hopes of earnings to come will eventually catch up to the loss-incurring star stocks.

"Remember, at the end of the day it’s earnings that drive the market, not the promise of earnings," Bleier said. "But that’s something you keep in the corner of your mind because if you think about that, that’s going to keep you out of these gainers the individual investor is piling into."

US stocks bullish

NEW YORK: US stocks powered ahead inearly morning trading on Friday, boosted by a positive employment report that showed inflation remains under control. Strong sectors included Internet, banking and telecom stocks. All major broad-market indices were up more than 1 per cent, with companies such as IBM, Incyte Pharma and J P Morgan racking up big gains.

Dow Jones industrial average was up 146 points, or 1.44 per cent, at 10,311, with IBM up 3 at 106-3/8 and JP Morgan 4-5/16 higher at 113-3/16. The Nasdaq Composite Index, which hit a new intra-day high, was up 88 points, or 1.86 per cent, at 4,842. Among the gainers were Incyte Pharmaceuticals, up 7 at 229-15/16 and Razorfish, up 4-1/16 at 40.

The US Labour Department reported that non-farm employment rose by a smaller-than-expected 43,000 while the jobless rate increased to 4.1 per cent in February from 4.0 the previous month.