March comes in like a Wall Street lion

Show Caption Hide Caption What does Nasdaq 5000 mean? | America's Markets USA Today's Matt Krantz takes a look at the significance of Nasdaq 5000 in this eiditon of America's Markets.

Finally.

The Nasdaq composite capped its long march back to 5000 on Monday, eclipsing, then closing above the long-hallowed mark for the first time since March 2000.

The arduous climb came on the heels of a 10-day winning streak that ended last week, Nasdaq's longest since July 2009. That helped fuel the technology-heavy market index to a 7% gain in February, the sixth-largest monthly climb since its 1971 launch.

As March greeted stock traders and investors, the Nasdaq resumed its assault on one of the longest-standing market barometers yet to fall amid Wall Street's six-year bull market. The Nasdaq spurted above 5000 shortly after trading began, clinging to gains before closing up 44.57 points (0.9%) to 5008.10, just off the day's highs.

The hype surrounding Nasdaq 5000 overshadowed the day's broader market action. A quieter but powerful rally propelled the Standard & Poor's 500 up 12.89 points (0.6%) to 2117.39, the Dow Jones industrial average up 155.93 points (0.9%) to 18,288.63 and the small-cap Russell 2000 up 9.3 points (0.8%) to 1242.62 — all record closing highs.

The Nasdaq remains below its all-time record of 5048.62 and intra-day high of 5131.52, both set March 10, 2000. Market watchers say the index is poised to climb higher.

"We're certainly not in bubble territory,'' says James Stack, head of Whitefish, Mt.,-based Stack Financial Management and editor of market newsletter Investech Research.

Although Wall Street is likely in the late stages of one of its longest bull markets, the Nasdaq could power up to 5300 or even 5500 before the rally ends, Stack says.

While the Dow, S&P 500 and other market indexes have long eclipsed prior records and continue to set new ones, Nasdaq's road back has been long and arduous. It wasn't until 2013 that the index closed above 4000 for the first time since September 2000.

The Nasdaq has already come back mightily from its October 2002, post-technology, bubble-burst low of 1108, a market nadir reached after investors finally had their fill of dubious dot-com companies whose valuations were based more on fantasy concepts than actual earnings, revenue and other more traditional market valuations.

"It's all of the things we thought we saw in the late '90s, except this time, most of these companies actually make money, so these levels should have much more staying power,'' says Dave Grecsek, managing director at investment manager Aspiriant.

Now, fueled by profit growth and tech stalwarts such as Apple, Google and Microsoft, cable TV giant Comcast, coffee purveyor Starbucks, electric-car maker Tesla, entertainment provider Netflix, social media giant Facebook and biotech giant Gilead Sciences — which just joined the ranks of dividend-paying companies — the Nasdaq is more about fundamentals and valuations than pipe dreams.

"Back in the tech-bubble years, you could tear your hair out over stock valuations, and you could float almost any kind of IPO,'' Stack says. "It's a very different scenario today. And we clearly do not have a valuation bubble. Nasdaq stocks have always carried a premium over the broader market because of perceived and real growth potential. At current levels, the market isn't cheap, because it's a mature market. But it's not what I would call extreme."

The Nasdaq has topped 5000 at the closing bell on only two occasions — March 9 and 10, 2000. Its all-time closing high came on that second day, when it hit 5048.62.

The Nasdaq is "showing the robustness of America's intelligence and innovation,'' says Kevin Kelly, chief investment officer for Recon Capital Partners. "The index has companies that have great balance sheets and are trading at reasonable valuations. If you look at the Nasdaq 100, which comprises 90% of the Nasdaq composite, it has averaged annual sales growth of 20.5% for the last three years, compared to 8.5% for the S&P 500."

Monday's broad market gains overshadowed the hits some individual stocks were taking, however. Lumber Liquidators sank 25% to $38.83, extending last week's 25% loss.

The flooring retailer has cracked under pressure from lower-than-expected quarterly earnings, a federal probe and Sunday's 60 Minutes report, which alleged the company's imported flooring contained high levels of formaldehyde.

And despite an uptick in crude oil prices, energy and oil driller stocks fizzled. Among the losers; Noble, off 4.2% to $15.94, SeaDrill, down 5% to $10.99 and Goodrich Petroleum, down 11.6% to $3.96.