The Nasdaq Composite stock index closed at its highest level in more than two years Friday, as the tech stock renaissance spans into 2024, nearly erasing 2022’s historically down year.
Tech has stormed back even in the face of higher rates.
The Nasdaq ended Friday up 1.2% at 15,990.66, its top level since November 2021 and second-highest closing price ever.
The index, which tracks the roughly 3,000 companies listed on the tech-heavy Nasdaq stock exchange, is now just 0.4% shy of its 2021 peak.
The Nasdaq, up more than 8% in 2024 and over 50% dating back to the beginning of last year, has outperformed both the more sector-neutral S&P 500 and Dow Jones Industrial Average, the two other most widely tracked U.S. stock indexes.
Not to be outdone by the Nasdaq, the S&P 500 closed at a new record of over 5,000, while the Dow declined about 0.2% from its all-time high set Thursday.
Driving Friday’s gains for the Nasdaq were once again the trillion-dollar companies which account for roughly half of the market capitalization-weighted index, as shares of Amazon and Nvidia each gained more than 3%. The Nasdaq’s rally over the last 14 months has largely been thanks to the performance of the biggest tech stocks dubbed the “magnificent seven,” namely Nvidia (up almost 400% during the stretch) and Meta (up nearly 300%). Tech stocks’ rosy run came after the Nasdaq tallied its worst year since 2008 in 2022, owing to the dramatic rise in interest rates. Higher rates are typically a negative for all stocks as higher bond returns appear attractive, but tech stocks tend to be hit harder as the growth-focused sector heavily relies on debt financing to scale operations.