Nasdaq 100 Closes at Record as Markets Surge

The Nasdaq 100 closed at a record Friday as tech stocks continued to surge despite the disruption caused by the coronavirus pandemic.
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The Nasdaq 100 on Friday closed at a record as tech stocks continued to surge despite the disruption caused by the coronavirus pandemic.

The Nasdaq 100, a listing of 100 of the Nasdaq's largest non-financial companies, finished up 2.02% to 9,824, surpassing the previous record close of 9,718.73 on Feb. 19. 

The listing features such tech giants as Microsoft  (MSFT) - Get Report, Apple  (AAPL) - Get Report, Amazon  (AMZN) - Get Report  and Netflix  (NFLX) - Get Report.

The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all closed higher Friday after the U.S. economy added a surprise 2.5 million jobs last month. The Nasdaq composite touched an intraday high.

"When people believe the market will go up, it goes up, because optimism is contagious," said Adam Goldstein, co-founder and former chief executive of Hipmunk and former Y Combinator visiting partner. 

"The same is true - faster - on the way down. Right now a lot of people are seeing a lot of other people optimistic about tech, because the companies seem to be faring better than most others."

Jeff Yasuda, founder and CEO of Feed.fm, said that "many of these companies, particularly names like Netflix, Amazon and Google  (GOOGL) - Get Report, have performed incredibly well despite the covid crisis."

"My view is that companies that have performed well during the crisis - Peloton  (PTON) - Get Report, Amazon, Netflix, etc. - will continue to perform well as the 'new normal' includes social distancing,'" he said.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said "technology companies that figure so much more prominently in the Nasdaq 100 have weathered the covid-19 storm so much better than a broad-based cross-section of U.S. companies."

"Clearly the economy is opening back up and all of the companies that have made it through the covid-19 crisis so far are likely to see their earnings improve from the depths of March, April and May," he said. 

"However, in the event that we have a setback in the economic recovery, it is likely that those technology companies which can thrive in a work-from-home environment are likely to outperform those companies that require people to get back together to assemble in public, like airlines, hotels, restaurants, casinos, sports stadiums, etc."

Zaccarelli added that "despite the fact that it makes sense that technology companies – and their stocks – would bounce back more quickly than those of the rest of the economy, the valuations being put on those stocks are still very high."

"Just like in the late 1990s, when people embraced the idea that the internet would change society forever – and they were right – there is such a thing as paying too much even for a good thing," he said. 

"As happened back then, I fear we are entering a period where we will bid these companies’ stock prices too high, despite the underlying positive fundamentals that are driving the rally."