Thanks to the surging technology sector and broad market rally, the tech heavy NASDAQ Composite Index (INDEXNASDAQ:.IXIC) topped the major milestone of 6,000 for the first time in Tuesday’s trading session and remained ahead of the magic mark through Wednesday trading.
This represents the first 1000-point move since the dot-com era in early March 2000.
Notably, the index gained nearly 12% in the year-to-date timeframe, nearly double the returns of the Dow Jones Industrial and S&P 500 indexes.
A Surge From Tech Stocks Leads the Way
Most of the surge came from five technology giants – Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) – that collectively account for 40% weight in the index.
These stocks are scaling new highs this year and are the major beneficiaries of Trump’s proposed policies, especially the tax reform, which could allow companies to bring back cash being held overseas at lower rates.
As promised, the President announced a big tax reform and tax reduction on Wednesday. (read: 5 Hottest Tech ETFs of 2017).
Additionally, the emergence of new technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones and virtual reality devices are fueling growth in the sector. With the global economy picking up momentum, technology companies are likely to outperform and are less susceptible to interest rates or deregulation.
Moreover, the tech sector is expected to be the second largest contributor to record Q1 earnings growth in many years, trailing finance. It will likely post earnings growth of 11.2%, per the latest Earnings Preview.
Part of the upside also came from the broader market rally on continued political relief from the outcome of the first round of the French presidential election, which has eased fears of a populist rise.
Further, solid earnings have been driving the market higher.
In particular, big companies outside the technology sector such as fast food chain McDonald’s Corporation (NYSE:MCD) and construction machinery maker Caterpillar Inc. (NYSE:CAT) helped the Nasdaq to outperform yesterday (read: 5 European ETFs Soaring on French Election Results).
Given this, investors seeking to ride the Nasdaq bull could consider the following ETFs. These funds might see smooth trading and massive trading volumes in the days ahead if the trend persists.