Nasdaq Surpasses 20,000 for the First Time: A Surge Driven by Quantum Computers, Robo-Taxis, and New Technologies

Nasdaq Surpasses 20,000 for the First Time Since Its Inception in 1971

Led by Tesla and Alphabet in a Bull Market

"Elon Musk Surpasses $400 Billion in Net Worth for the First Time in History"

On the 11th (local time), the tech-heavy Nasdaq index on the New York Stock Exchange surpassed the 20,000 mark for the first time in history. This is the first time the Nasdaq index has exceeded 20,000 since its inception in 1971. After a 43% surge last year, the Nasdaq index has risen by 33.46% this year up to this day.

Leading the Nasdaq index were big tech companies like Tesla and Alphabet, part of the so-called 'Magnificent 7'. New technologies introduced by big tech, such as Google's quantum computers and Tesla's robo-taxis, acted as catalysts. The U.S. November Consumer Price Index (CPI) growth rate meeting expectations also reassured the market, fueling the bull market.

Tesla's Stock Rises About 6%

Among the M7, Tesla showed the most notable rise. Tesla's stock closed at $424.77, up 5.93% from the previous day, surpassing the previous high of $409.97 on November 4, 2021, to reach an all-time high.

Investors are positively evaluating Musk's growing influence on President-elect Donald Trump. This is especially because Musk has been appointed as a co-head of the 'Department of Government Efficiency' (DOGE), proposing cuts in federal spending and deregulation. Investors anticipate that regulations on Tesla's autonomous vehicle business could be significantly relaxed. Wall Street's expectations for Tesla's unmanned autonomous taxi, the robo-taxi 'Cybercab', are also reflected in the stock price.

Following Dan Ives, an analyst at Wedbush Securities who is bullish on Tesla, Morgan Stanley analyst Adam Jonas also raised Tesla's target price to $400.

Bloomberg reported that Musk has become the first person in history to surpass a net worth of $400 billion. A major factor in Musk's rapid increase in net worth is the insider stock sale of the unlisted company SpaceX. Recently, SpaceX has been pushing for stock sales by insiders such as employees and early shareholders, with the overall company valuation estimated at about $350 billion. As a result, Musk's net worth, who founded SpaceX, has increased by about $50 billion to reach $439.2 billion.

The valuation of xAI, an artificial intelligence (AI) startup founded by Musk, is also rising. xAI's company valuation was estimated at around $50 billion in a mid-November fundraising, more than doubling in six months compared to the May fundraising ($24 billion).

Google Continues Strong Performance for Two Days with Quantum Computer Development

Alphabet, Google's parent company, continued its strong performance for the second day, rising 5.5% on news that Google developed a high-performance quantum computer. Google announced the previous day that it developed a quantum computer that solves problems in just 5 minutes, which would take the world's fastest supercomputer, Frontier, 10 septillion (10 to the power of 24) years. Google's self-developed quantum chip, Willow, is applied to this quantum computer. Other major tech stocks such as Nvidia (3.1%) and Meta (2.2%) also rose significantly.

The strong market on this day is also influenced by the U.S. November CPI growth rate remaining at expected levels, reassuring the market. The U.S. CPI growth rate slowed to 2.4% in September, rose to 2.6% in October, and increased again by 2.7% in November, but investors judge that it is not at a level that would affect the Federal Reserve's monetary policy.

Wall Street is taking it for granted that the Federal Reserve will cut the benchmark interest rate by 0.25% at the Federal Open Market Committee (FOMC) meeting on the 17th-18th. According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market sees a 98.6% probability that the Fed will cut the rate to 4.25-4.50% at the December FOMC meeting as of 2 a.m. (local time) on the 12th.

New York = Park Shin-young, Correspondent nyusos@hankyung.com