Nasdaq fights its way back into positive stock market territory

— -- Investors finally have a tangible reason, instead of just hope, to feel a little better about the stock market. The Nasdaq composite index jumped 3.8% Thursday amid a broad stock market rally, becoming the first major stock market index to pull into the black for the year.

And while it might be easy to discount the Nasdaq's scant 0.6% gain for 2009 as good news only for its largely technology membership, the index's improvement might be a sign of better news for the rest of the market.

"Investor sentiment is shifting. The stimulus package and the credit markets are getting some traction," says Andy Brooks, trader at T. Rowe Price. A successful auction of government debt Thursday also encouraged investors, he says.

While the Nasdaq's 58-point gain to 1587.00 is welcome, as it signals a 25% rally from its bear-market low earlier this month, the bear has still left its footprint all over stocks. The Dow Jones industrial average, despite jumping 174.75 points Thursday to 7924.56, is down 9.7% for 2009 and off 44% from its 2007 high. The Standard & Poor's 500 jumped 2.3% Thursday, but it is still off 7.8% this year.

The broader S&P 500 is acting better, though, having rallied 23% from its bear-market low.

The Nasdaq's bounce could mean good things for the rest of the market because:

•Tech stocks tend to be an early indicator of a better stock market. While tech stocks have gained 57%, on average, during the first year of a new bull market, the S&P 500 has followed with a 38% average gain, says Sam Stovall of S&P.

•Positive earnings from tech companies could comfort investors. With the first quarter coming to a close, investors are hopeful technology-related companies might have some decent outlooks, says David Sowerby of Loomis Sayles. Best Buy on Thursday posted 23% lower quarterly profit but topped estimates and gave a better-than-expected forecast. Best Buy shares jumped 13%.

•Credibility is needed to reinforce hopes for a second-half recovery. Earnings are expected to fall 22% in the first quarter from the first quarter of last year, S&P says. But investors estimate a 26% increase in 2009 earnings over 2008.