Stock rally pushes Nas­daq to record

Los Angeles Times - - BUSINESS BRIEFING -

U.S. stocks notched their big­gest gains in a week Thurs­day, push­ing the Nas­daq com­pos­ite in­dex to an all-time high.

The rally came a day af­ter the Fed­eral Re­serve sug­gested that it wasn’t plan­ning to raise in­ter­est rates right away. Ul­tra-low rates over the last six years have helped drive a bull mar­ket in stocks that has pushed the mar­ket to record lev­els.

The cen­tral bank said Wed­nes­day that it needs to see more im­prove­ment in the econ­omy and stronger signs of inf la­tion be­fore lift­ing rates, re­as­sur­ing in­vestors.

“The Fed’s likely to raise rates later this year, but maybe not as ag­gres­sively as some mar­ket par­tic­i­pants wor­ried,” said Michael Baele, man­ag­ing di­rec­tor and se­nior port­fo­lio man­ager at U.S. Bank Pri­vate Client Re­serve.

The Dow Jones in­dus­trial av­er­age gained 180.10 points, or 1%, to 18,115.84. The Stan­dard & Poor’s 500 in­dex rose 20.80 points, or 1%, to 2,121.24.

The Nas­daq added 68.07 points, or 1.3%, to 5,132.95, sur­pass­ing the most-re­cent high for the in­dex of 5,106.59 set May 27.

Most ma­jor U.S. stock in­dexes are up for the year, but the Nas­daq is turn­ing in the best per­for­mance. It’s up 8.4% this year, com­pared with a gain of 3% for the S&P 500 in­dex and 1.6% for the Dow. The Nas­daq’s rise has been driven by tech­nol­ogy and healthcare. In a slow­growth world, in­vestors are fa­vor­ing stocks where earn­ings will be bet­ter than av­er­age. Although the Nas­daq, which tracks 2,500-plus stocks, has been steadily climb­ing since 2011, its as­cent isn’t the crazed surge that drove it to its dot-com bub­ble era highs in 2000. This time the gains are un­der­pinned by solid com­pa­nies, said Stephen Freedman, se­nior in­vest­ment strate­gist at UBS Wealth Man­age­ment Amer­i­cas. The av­er­age price-earn­ings ra­tio of the Nas­daq, a mea­sure of how much in­vestors are will­ing to pay for ev­ery dol­lar of earn­ings the com­pa­nies in the in­dex gen­er­ate, is 21. When theNas­daq was at its high­est, the ra­tio reached194. Drug devel­oper BioMarin Phar­ma­ceu­ti­cals and biotech­nol­ogy com­pany Ra­dius Health were among the big gain­ers in the in­dex Thurs­day. Both com­pa­nies re­ported pos­i­tive news on treat­ments still in de­vel­op­ment. BioMarin vaulted $15.06, or 12.2%, to $138.66, and Ra­dius added $7.91, or 15.3%, to $59.64. In­vestors also wel­comed the mar­ket de­but of fit­nesstrack­ing gear com­pany Fit­bit on Thurs­day. The com­pany’s stock jumped $9.68, or 48.4%, to $29.68 af­ter pric­ing its ini­tial public of­fer­ing at $20 per share.

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