Nasdaq Races Past 5,000 Associated Press

It started 29 years ago as a way to measure the progress of fledgling companies too small or weak for the prestigious New York Stock Exchange.

On Thursday, the Nasdaq Stock Market’s composite index soared to its first close above 5,000, cementing its role as the top-performing and fastest-growing barometer of the U.S. stock market.

It took a little more than two months for the technology-driven index to breach its latest 1,000-point milestone, rising 149.60 points Thursday to close at 5,046.86.

The index is now up 24 percent for the year, compared with a 13 percent loss for its blue-chip counterpart, the Dow Jones industrial average. The Nasdaq’s velocity is unmatched, as well; it took the Dow nearly nine months to rise from 4,000 to 5,000 in 1995.

While many Wall Street pros insist that round numbers like 5,000 hold no special significance, the Nasdaq’s rapid growth has left some slightly awestruck.

“The move up has been nothing short of scintillating,” said Hugh Johnson, chief investment officer at First Albany Corp.

The Nasdaq Stock Market began trading on Feb. 8, 1971. It was the world’s first electronic market, where traders posted their prices on computer screens instead of haggling on a trading floor. The new market’s name, the National Association of Securities Dealers Automated Quotation system, came from the self-regulatory security industry group that created it.

The Nasdaq composite index was set up to measure all of the new market’s companies, which at the time numbered 2,500. Now about 5,000 companies trade on the Nasdaq.

The shining performance of the Nasdaq has provided the only real light for investors this year. The market is constantly expanding with new stocks that tap into investor obsession with anything having to do with computers, telecommunications, biotechnology and, of course, the Internet - all of which have come to symbolize the “new economy.”

Meanwhile, most other stocks have been stuck in a narrow range, hemmed in by worries about inflation and rising interest rates. Blue-chip stocks - the manufacturers, transportation, financial and other companies of the “old economy” - have been especially moribund.