Nasdaq Hits New Record Close: Major Tech Names Drive the Market Forward
On Thursday, April 28, 2022, the Nasdaq Composite Index
closed at a new all-time record
of 15,280.79. This significant milestone was driven primarily by the impressive performances of major
tech companies
, which have been leading the market’s recovery from the pandemic-induced downturn. The
S&P 500
and
Dow Jones Industrial Average
also posted gains, albeit less impressive than their tech-heavy counterpart.
Apple Inc. (AAPL)
up 1.6%
Apple, the world’s most valuable publicly traded company, continued its upward trend as investors remain optimistic about the tech giant’s
product pipeline
. The iPhone 13 and other new devices are expected to be unveiled later this year, and the link streaming service is gaining subscribers.
Microsoft Corporation (MSFT)
up 1.7%
Microsoft, the second-largest company in the S&P 500, also saw gains as investors look forward to its
earnings report
next week. Analysts expect strong earnings from the company’s cloud business, which has been a major contributor to Microsoft’s growth in recent years.
Amazon.com, Inc. (AMZN)
up 1.2%
Amazon, the world’s largest online retailer, continued its ascent as it expands into new markets, including pharmacy and advertising. The company’s
Prime Day event
is also expected to take place later this year, which could give the stock a further boost.
Alphabet Inc. Class A and Class C shares (GOOGL, GOOG)
up 1.8% and 2.0%, respectively
Alphabet, the parent company of Google, also posted gains as investors look forward to
new product announcements
from the tech giant. Google’s Pixel phones, a new smartwatch, and updates to its Chrome browser are all expected to be unveiled in the coming months.
Overall, these major tech companies have been driving the market forward, and their continued growth is expected to help the Nasdaq Composite Index maintain its upward trajectory.
Exploring the Nasdaq Composite Index: A Major Player in the Stock Market
The Nasdaq Composite index, one of the most widely followed stock market indices, represents over 2,500 companies and 10 sectors listed on the Nasdaq Stock Market.
Significance
This index serves as a benchmark for investors seeking to understand the performance of the tech-heavy sector and the broader US economy. It is calculated using a market-capitalization weighted methodology, meaning that companies with larger market capitalizations have a greater influence on the index’s value.
Recent Record Close
In mid-March 2023, the Nasdaq Composite index reached a record close of 17,465.96 points, marking a significant milestone in the stock market’s recovery from the COVID-19 pandemic. This achievement reflects the resilience and growth of major tech companies that have weathered the economic downturn and continued to thrive amidst changing market conditions.
Tech Companies Leading the Way
Some of the major tech companies driving the Nasdaq forward include Apple, Microsoft, Amazon, Facebook, and Google parent Alphabet. These companies have demonstrated consistent revenue growth, robust earnings reports, and innovative product launches. Their collective influence on the index highlights the importance of the technology sector in shaping the future of the global economy.
Background
The current state of the stock market, particularly the Nasdaq and tech stocks, has been a subject of great interest and analysis in recent times.
Explanation of the current state
Following the global economic downturn caused by the COVID-19 pandemic, the stock markets have been on a recovery trajectory. This trend is most evident in the technology sector, where companies like Apple, Microsoft, Amazon, and Google’s parent Alphabet have set new record highs. The Nasdaq Composite Index, which is heavily weighted towards tech stocks, has been a standout performer. As of now, it is trading above the 15,000 mark for the first time since mid-2000. This resurgence can be attributed to several factors, including a pickup in economic activity, monetary stimulus from central banks, and the accelerated shift towards remote work and digital services.
Historical context: Previous record closes of the Nasdaq
The late 1990s saw a tech-driven bull market that propelled the Nasdaq to new heights. The index reached an all-time high of 5,048.62 on March 10, 2000. However, the market soon experienced a sharp decline due to a combination of factors such as overvaluation, excessive speculation, and the bursting of the dot-com bubble. This period saw many high-flying tech stocks plummet from their lofty perches.
Key milestones since then
Since the turn of the millennium, the Nasdaq has seen several significant milestones. It first closed above 5,000 again on December 19, 2013, marking a significant psychological barrier and a symbol of its recovery. Another notable event was the index’s reaction to the 2008 financial crisis, when it dropped from around 5,000 to below 3,000 before recovering. This period was characterized by widespread panic and uncertainty, with many investors facing large losses. However, the Nasdaq, like other major indices, eventually rebounded, driven by government intervention and a gradual economic recovery.
I Major Tech Companies Fueling the Nasdaq’s Growth
Apple Inc. (AAPL)
Apple, the world’s most valuable company[1], reported record-breaking financial performance in its Q3 2021 earnings call, with revenues up by 11.3% YoY to $89.6 billion.[2] As of August 2021, Apple’s market capitalization stood at a staggering $2.4 trillion.[3]
Recent product releases, such as the M1-powered MacBooks,[4] new iPads, and the
Microsoft Corporation (MSFT)
Microsoft, the second-largest company in the world[6], reported financial results that showed continued growth in its Q4 2021 earnings call. Key business segments driving this growth include the
Productivity and Business Processes
segment, which includes Office 365 and LinkedIn, and the
Intelligent Cloud
segment, which includes Azure and Dynamics 365.
CEO Satya Nadella’s strategic direction for Microsoft has been focused on cloud computing and artificial intelligence. Under his leadership, the company has made several acquisitions, such as GitHub[7] and LinkedIn, to expand its offerings and maintain its position as a major player in the tech sector.
Amazon.com, Inc. (AMZN)
Amazon’s dominance in the e-commerce and cloud computing industries has led to significant growth for the company. In Q2 2021, Amazon reported a 44% increase in operating income compared to the same quarter last year.[8]
Recent market-moving events include the acquisition of MGM Studios[9], partnerships with Deliveroo and Whole Foods Market, and the
Facebook, Inc. (FB) and Alphabet Inc. (GOOGL/Google)
Facebook, despite facing numerous controversies, continues to grow. In Q2 2021, Facebook reported a 15% increase in revenue compared to the same quarter last year.[10]
Alphabet, the parent company of Google, reported a 32% increase in revenue in Q2 2021 compared to the same quarter last year.[11]
These tech giants have had a significant influence on the Nasdaq and broader tech sector trends, with their innovations and market capitalizations shaping the industry.
E. Tesla, Inc. (TSLA)
Elon Musk’s electric vehicle company, Tesla, has made a significant impact on the Nasdaq and broader tech market. In Q2 2021, Tesla reported record-breaking revenue of $11.96 billion, a
Tesla’s market capitalization has grown to over $800 billion[13], making it one of the most valuable companies in the world. The company’s future growth prospects include expansion into new markets, such as Europe and China, and the development of autonomous vehicles.