U.S. stocks rose in midday trading Monday, with the Nasdaq Composite Index climbing above 5,000 for the first time in 15 years, as gains in consumer purchases signaled strength in the biggest part of the economy.
Consumer spending, adjusted for inflation, rose in January after a drop in December, a sign the plunge in gasoline prices is helping boost the biggest part of the U.S. economy. McDonald’s Corp., Whirlpool Corp. and Tiffany & Co. added more than 1.1 percent, leading gains in discretionary stocks.
The Nasdaq Composite added 0.7 percent to 5,000.02 at 11:52 a.m. in New York, after earlier rising to 5,001.29. The Standard & Poor’s 500 Index climbed 0.4 percent to 2,113.40. The Dow Jones Industrial Average advanced 120.19 points, or 0.7 percent, to 18,252.89.
“There’s a lot to digest after the market snapped back with a good month after January was horrible,” Larry Peruzzi, the Boston-based director of international trading at Cabrera Capital Markets LLC, said by phone. “The end result is these markets are near or at all-time highs so it’ll be interesting to see if people look at that as an opportunity to take profit or if they say it’s recovered and time to jump back in.”
The S&P 500 reached fresh records four times in February, while the Dow average climbed 5.6 percent for its best month since January 2013. The index also topped its record from December for the first time in 2015.
Unlike the dot-com era, when investors snapped up Internet companies with promise but little profit, today’s gains are built on earnings driven by demand for products such as Apple Inc.’s iPhone and Google Inc.’s web-search services.
Momentum is building in stocks that have the fastest profit growth, with companies from Apple to Intel Corp. spending more money than anybody else to buy back shares. While the advance has brought the Nasdaq close to new highs, valuations are only a fraction of where they were 15 years ago.
The Nasdaq Composite “is not going to make me change my investment strategy, but it makes me feel good about staying overweight stocks,” Paul Zemsky, the head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone from New York. “It’s a confidence booster, both for the market and consumers and it’ll make some good headlines.”
It has taken two bull markets and more than 4,500 days for the Nasdaq to get close to making up all the ground lost in the dot-com collapse. The index surged 7.1 percent in February, its best month since 2012, and is within 1 percent of a record reached in 2000.