The Nasdaq Composite index soared past the 20,000 mark for the first time on Wednesday. Tech stocks led the charge after inflation data met Wall Street’s expectations for another interest rate cut this month. The index closed at 20,034.89, up 1.8% for the day.
Most stocks rose after new consumer inflation figures came out. This reassured investors that the Federal Reserve will likely lower rates again next week for the third time in 2023. Tech stocks performed especially well.
Alphabet shares jumped over 5% for the second day in a row after Google’s parent company unveiled a new quantum computing chip. Tesla also saw its stock rise more than 5% to hit a record high not seen since 2021. Nvidia gained 3%, while Amazon and Meta posted sizable increases too.
Nasdaq milestone driven by tech stocks
It took the Nasdaq about four and a half years to double in value after first crossing 10,000 points in June 2020. This happened as stocks bounced back from the COVID-19 sell-off in March of that year.
Tech companies, which account for nearly 60% of the index, have played a major role in boosting its performance recently. The tech sector thrived in 2020 and 2021 as COVID-19 lockdowns moved much of daily life online. But tech hit a bump in 2022 as growth slowed when life partially returned to pre-pandemic norms.
The sector got a boost in late 2022 with the release of ChatGPT, sparking an AI craze that has driven tech stocks to today’s new highs. Since 2020, the Nasdaq has delivered returns of almost 19% per year. This beats the returns of the less tech-heavy S&P 500 over the same time frame.
It is also nearly double the Nasdaq’s average annual return since the index began in 1957.
