How NASDAQ Nixed the Naysayers

We have seen the future of the American economy, and its name is NASDAQ. The tech-heavy stock index continued its surge into record territory Thursday morning, after Wednesday's historic breaking of the 4,000 barrier. And while the good new continued for the Dow and the S&P 500, both of which surged in the last trading session before Y2K, neither has been able to match the NASDAQ comebaq. That index's outperforming of both the Dow and the S&P may make 1999 the year tech stocks finally silenced their naysayers. "The NASDAQ represents the vanguard of the American economy," says TIME senior business writer Bernard Baumohl. "Many of the companies represented on the index are going to be the winners in the next ten or twenty years because they're on the cutting edge of innovation and growth in the American economy." And that's going to make NASDAQ the place to be in the unnamable decade were about to enter.

Doubters may counter that the tech-stock surge is Y2K-related, and that business has been booming precisely because major corporations have invested heavily to fumigate their systems against bugs. "But," says Baumohl, "it's unlikely that there'll be a reduction in capital expenditure on technology once the Y2K problem has passed — companies are more likely to maintain that investment in order to stay ahead. There may be a shakeout in the NASDAQ in the coming months, but it will probably still outperform the DOW and S&P again next year, and in the foreseeable future."