The Nasdaq Composite index closed above 10,000 points for the first time on Wednesday, even as the Federal Reserve warned that the US recovery from the coronavirus recession “is going to take some time”.
The tech-laden index ended the day at a record 10,020.35, led by share trading in heavyweights such as Apple, Amazon, Microsoft and Tesla, who each hit all-time highs.
Nasdaq’s 0.7% rise yesterday came as wider US stock markets fell — the Dow slipped 1% to 26,989, and the S&P 500, edged 0.5% lower to 3,190.
These markets were perhaps more in tune with the sombre message that came from the Fed, which said it would leave interest rates at near zero for the foreseeable future and projected high unemployment for several years as a result of the health emergency.
Fed promises to ‘limit lasting damage’
The central bank left interest rates unchanged at 0-0.25% by a unanimous vote at the end of its two-day policy meeting and pledged to continue buying Treasuries and mortgage-backed bonds at least at the current unprecedented pace.
Some 20 million Americans have lost their jobs since February, and the Fed expects an unemployment rate of 9.3% at the end of the year.
Many economists forecast the US was heading for a jobless rate of 20% in 2020 until May’s shock payroll data showed that 2.5 million Americans found work, when most predictions thought unemployment would grow by around 2 million. The country’s current unemployment rate is 13.3%, but it had been 3.5% in February.
Fed Chairman Jerome Powell said the central bank will do “whatever we can, and for as long as it takes” to support the recovery and “limit lasting damage” to the economy, which was officially declared to be in recession on Monday.
Powell added: “We do think that this is going to take some time — I think most forecasters believe that.”
Nasdaq’s strong IPO pipeline
However, investors have been cheered by encouraging jobs and housing data as well as more states opening up their economies as the effect of the virus eases.
Traders have backed tech stocks, boosted by stay-at-home measures, hoping they will post strong sales and earnings growth throughout the year.
Nasdaq, first published in 1971, first broke through the 10,000-point barrier on Tuesday, before closing below the benchmark.
Around 14% of the companies on the index are in the tech sector, while 17% are in the biotech sector. About 83% of the firm are US-based.
The index said as the US economy begins to reopen, more companies are starting to look at tapping into the public markets.
Nasdaq chief executive Adena Friedman said: “We actually have a pretty healthy pipeline of listing candidates over the coming weeks and months that continue to see the public markets as their path to the future. That sense of access to permanent capital has never been stronger in their minds.”
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