Nasdaq blasts skyward aboard tech-fueled rocket

NEW YORK -- Wall Street is smitten again with shares of tech firms that make whiz-bang stuff such as smartphones, computer chips, wafer-thin laptop computers and nifty software that allows folks to socialize online.

In a flashback to the go-go 1990s, when technology stocks were as popular as rock stars, the Nasdaq composite is again the undisputed champ of Wall Street.

The tech-dominated index is riding an 11-session winning streak — its longest moneymaking stretch since September 1996. To add a bit of historical perspective, that was the month and year that a then-20-year-old Tiger Woods turned pro.

It has been a heady time for tech investors. After Wednesday's 10-point gain to 1926, the Nasdaq is up 10.3% since its win streak began July 8. It's up 22.2% for the year, vs. a gain of just 5.6% for the Standard & Poor's 500 index, a broad market gauge. The Nasdaq is also up nearly 52% from its March 9 bear market low.

What got investors' on-again, off-again love affair with tech heated up again? Pat Dorsey, director of equity research at Morningstar, says, "Tech is an easy story to sell."

Upbeat second-quarter earnings reports from leaders such as Apple and Intel have set the bullish tone.

Another key to the tech story is that, unlike financials, tech firms have much stronger balance sheets. "They generate a lot of cash and have very little debt," Dorsey says.

And while some tech companies, such as Apple, are exposed to the hard-hit U.S. consumer, most tech firms' sales come from business customers — both at home and abroad — that utilize tech to improve productivity. "Tech is not terribly leveraged to the consumer," Dorsey says.

Tech is also a bet on a global recovery, adds David Kelly, chief market strategist at JPMorgan Funds. As the world economy goes, so goes tech. Tech stocks in the S&P 500 make 55% of their sales abroad, vs. 48% for the index overall, S&P says.

Big techs such as Microsoft and Intel are also viewed as "a play on Asia," which is rebounding from the global recession more quickly than the U.S., says Henry Herrmann, CEO at Waddell & Reed. "Everyone wants a way to play China," he says.