Today: Record-breaking gains in the first quarter helped Wall Street indexes maintain their milestone numbers, as Silicon Valley stocks like Apple (AAPL), Netflix (NFLX) and LinkedIn drove them higher.
Dow Jones, S&P 500 set records for first-quarter gains
The first quarter ended for Wall Street on Friday with yet more gains, as stocks closed out the most successful first three months of a year in history.
All three major stock indexes attained milestones not seen in years in the first quarter, with the Dow Jones industrial average surpassing 13,000 for the first time since 2008, the Nasdaq composite index topping 3,000 for the first time since 2000, and the Standard & Poor's 500 moving higher than 1,400 for the first time since 2008. All three indexes maintained their milestone numbers through the close of trading Friday.
In the quarter, the Nasdaq grew by 18.7 percent, the S&P increased 12 percent and the Dow advanced 8.1 percent. The percentage
Marc Pado, a market strategist at DowBull.com, told Marketwatch.com that the first quarter gains would make for "a stunning year, and is even more so as a quarter. But I do think it's a comeback from an underexposed level for institutions; they were so scared they were hiding in defensive issues, and are now looking for opportunities to make money and not just hide. That shift alone has also helped move markets higher."
Reuters pointed out that the stock market accomplished its large gains in the first quarter on a market with low volume, as the number of stocks traded per day hs dropped about 10 percent from last year, possibly due to smaller investors staying out of the market for fears that the volatility of 2011 could return at any time.
Donald Selkin, chief market strategist at National Securities, said those factors should not be a concern, however.
"For a regular investor, low volume and volatility shouldn't be a factor," he told Reuters. "Volume isn't a concern since if you own a stock, what difference does it make if goes up on high volume or low?"
The market's strong gains in the past three months have left investors and analysts mostly in two camps: One side believes that the gains may slow down but won't stop, and the other side sees a correction in the near future.
David Kelly, chief market strategist for JPMorgan Funds, fits squarely in the first group.
"There's no reason to avoid equities just because they've gone up a lot," he told Bloomberg News. "People are less fearful of a global financial meltdown emanating from Europe. If you look at valuations and the potential for economic growth, those things tell me the market should have room to move higher over the next few years."
Alan Brown, chief investment officer at Schroders of London, disagrees.
"The best of 2012 is probably behind us," he said. "We've had a very substantial rally. I'm not sure where the fresh round of good news comes from that we haven't already discounted in today's prices. I'm rather more cautious at the present time."
Apple's record-breaking, newsworthy quarter is big help to S&P
One of the biggest drivers for the stock market in the first quarter was Apple, which had an astounding three months of record-breaking stock prices that was credited for a good bit of the S&P 500's positive movement.
Despite a 1.7 percent dip on Friday that pushed the Cupertino company's shares below $600 at the close for the first time in a week -- mostly due to negative news about working conditions at Asian factories manufacturing iPhones and iPads -- Apple gained 48 percent in the first quarter. Thanks to a phenomenal holiday-shopping quarter, the release of a new iPad and the establishment of its first dividend since the mid-'90s, Apple closed at a record-high price in 33 out of 62 trading sessions in the quarter.
Apple took back the title of world's most valuable company in terms of market capitalization -- the total value of all shares in circulation -- thanks to its gains, including becoming only the sixth company in history to claim a market cap higher than $500 billion. At the end of the first quarter, Apple's market cap stood at $559 billion, easily outpacing the second-highest figure of Exxon, which had a market cap of $408.8 billion.
According to MarketWatch, the S&P's record first quarter was accomplished on the back of Apple, as the news source reported that 15 percent of the indexes gains were attributable to Apple, with all of the index's earnings growth stemming from the Cupertino tech giant.
Netflix, LinkedIn, freshly public companies also enjoy first quarter
Other Silicon Valley stocks were important in the stock market's first-quarter growth, as Netflix and LinkedIn found new life and IPOs brought fresh money into the market.
Netflix, which had a horrible 2011 that sent its stock price spiraling, perked back up at the beginning of 2012. While the Los Gatos-based subscription-video company's unsustainable early growth eventually waned, it still posted an increase of 66 percent in the first quarter.
Mountain View-based professional networking company LinkedIn also grew substantially on the stock market in the first quarter, reaching triple digits thanks to positive reports from the likes of Goldman Sachs and rumors of its interest in the for-sale Monster.com. LinkedIn shares rose 69.1 percent in the quarter.
IPOs brought attention to Silicon Valley as well. The most successful so far this year was San Francisco online-reviews site Yelp, which went public by selling at least 7.1 million shares at $15 apiece, and then saw the price skyrocket 64 percent in the first day of trading. Yelp has managed to maintain that gain, closing Friday at $26.89, 79.3 percent higher than its IPO price.
Yelp's San Francisco neighbor, Zynga, held its IPO near the end of 2011, but didn't see its shares close above that price until well into 2012. However, the stock gained 39.7 percent in the first quarter as the social-gaming company announced acquisitions and a new platform separate from Facebook, which is expected to have its public debut in the second quarter.
With Facebook's IPO approaching, the market for public debuts heated up at the end of the first quarter, with three Bay Area companies going public this week, and more action expected in the second quarter.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Down 3.79, or 0.12 percent, to 3,091.57
The blue chip Dow Jones industrial average: Up 66.22, or 0.5 percent, to 13,212.04
And the widely watched Standard & Poor's 500 index: Up 5.19, or 0.37 percent, to 1,408.47
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, the Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.