Many expect Nasdaq to set a new record soon, after gaining nearly 15 percent over the last 12 months.
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As the technology-heavy Nasdaq Composite Index closes in on the all-time high it reached in March 2000, investors are facing a market that barely resembles the go-go era of 15 years ago.Valuations, as measured by what investors are willing to pay for the last 12 months of earnings, are an eighth of what they were at the peak of the dot-com bubble, when the Nasdaq hit an intraday record of 5,132 before falling more than 63 percent in 12 months.Instead, three key factors underpin the Nasdaq's 125 percent rise over the last five years: the Federal Reserve's ongoing policy of near-zero interest rates that has made equities more attractive than bonds; the maturation of technology companies; and the rise of Apple Inc, a company that didn't appear among the largest 20 companies by market value in the index 15 years ago and now represents more than 10 percent of its weight.The rally in the shares of Apple – which has jumped nearly 68 percent over the last 12 months, including a 16.7 percent gain for the year to date – is likely to push the Nasdaq to new records, fund managers say.Apple's outsized presence in the Nasdaq – along with that of Google Inc, a company that was still private 15 years ago and now constitutes about 4 percent of the index – is one sign that the technology sector has matured, said Phil Orlando, chief equity market strategist at Federated Investors.
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