The Nasdaq Composite index crossed 20,000 points for the first time on Wednesday as big tech stocks soared after inflation data affirmed Wall Street’s expectations for another interest rate cut later this month.
The Nasdaq rose 1.8% to close at 20,034.89 on Wednesday. The majority of stocks rose after fresh consumer inflation data met expectations, reassuring investors that the Federal Reserve officials will cut interest rates for the third time this year when they meet next week.
Big tech stocks were particularly buoyant. Shares of Alphabet (GOOG)(GOOGL) advanced more than 5% for a second straight day after the Google parent unveiled a quantum computing chip. Shares of Tesla (TSLA) also gained more than 5%, to close at a record high for the first time since 2021. Nvidia (NVDA) shares climbed 3%, while Amazon (AMZN) and Meta (META) rose 2%.
The Nasdaq’s Road to 20K
The Nasdaq took about four and a half years to double in value after crossing 10,000 points for the first time in June 2020, when stocks were rebounding from March’s Covid-19 sell-off.
Tech stocks, which make up nearly 60% of the capitalization-weighted index, have turbocharged the index’s performance in recent years. In 2020 and 2021, the tech sector soared as Covid-19 lockdowns forced more of daily life onto digital platforms. Tech companies hit a speed bump in 2022 as growth slowed amid a gradual and partial return to pre-pandemic life. The sector was reinvigorated in late 2022 by the release of ChatGPT, which sparked an AI frenzy that gave rise to the Magnificent Seven and propelled tech stocks to today’s record highs.
The Nasdaq has returned nearly 19% annually since 2020, outpacing the less tech-focused S&P 500’s average return over the same period and nearly double the index’s average return since its inception in 1957.
Update—Dec. 11, 2024: This article has been updated to reflect index and stock prices as of the market close.
