The Nasdaq composite index briefly cracked 3,000 on Wednesday for the first time since the collapse in dot-com stocks more than a decade ago. The stock market edged lower but was still on track to close its best February in 14 years.
The milestone for the Nasdaq, heavy with technology stocks, came a day after the Dow Jones industrial average closed above 13,000 for the first time since May 2008, before the financial crisis that fall.
The Nasdaq's biggest component, Apple, topped $500 billion in market value, the only company above the half-trillion mark and only the sixth in U.S. corporate history to grow so big. Apple might reveal its next iPad model next week.
In the broader market, stocks opened higher but fell sharply after about an hour. They climbed back toward gains in the early afternoon, and were down modestly shortly after 1 p.m. The Dow fell 15 points, or 0.1 percent, to 12,990. The Standard & Poor's 500 index lost 2, or 0.2 percent, to 1,370. The Nasdaq dropped 5, or 0.2 percent, to 2,981.
Still, stocks were headed for their strongest February gains since 1998. The S&P 500 is up 4.2 percent for the month. The Dow has gained 2.6 percent this month after opening the year with its best January since 1997.
Stocks rose early after the government said that the economy grew faster at the end of last year than previously estimated - a 3 percent annual rate, the best reading since the spring of 2010.
They turned negative after Federal Reserve Chairman Ben Bernanke testified on Capitol Hill that the economy has performed better in recent months than the Fed had expected. Gas prices will add to inflation, Bernanke said, while unemployment is falling faster than expected.
Bernanke's remarks made it appear less likely that the Fed will begin another round of bond-buying to juice the economy. Bond-buying increases the money supply and could add to inflation, so signs of inflation make it a less appetizing option. And unemployment must remain high for the Fed to justify such an aggressive policy.
U.S. Treasury debt plunged on speculation that the Fed wouldn't enter the market again. The yield on the 10-year Treasury note spiked to 2.02 percent during Bernanke's remarks, from 1.94 percent a few minutes earlier. It fell back to 1.99 percent shortly after 1 p.m. Bond yields rise as their prices fall.
The Dow, which had been up by as many as 51 points, reversed course as Bernanke started speaking. It turned negative within the hour.
The losses were broad, with seven of the 10 industry groups in the S&P 500 losing ground. Materials and energy stocks had the sharpest declines; consumer products and financial companies rose modestly.
The price of gold was virtually unchanged until 10 a.m., just as Bernanke started speaking, then fell more than $70 an ounce. It recovered some of its losses and was down about $64 an ounce at $1,725.
The Nasdaq has gained 15 percent this year, compared with 6.5 percent for the Dow and 9 percent for the S&P 500. The Nasdaq already has risen almost as much this year as it did in all of 2010. It edged lower in 2011.
The strength of tech stocks is no surprise when you consider the licking they took during last year's market gyrations. Tech stocks tend to be more risky and rise faster as investors regain confidence in the economy.
The Nasdaq also is benefiting from long-term economic currents that could carry tech stocks even higher. Many companies put off replacing worn-out technology during the recession and now are investing again.
There's also a growing global market for technology, and big tech companies face less competition these days when they try to acquire smaller ones. Established companies like IBM and Oracle can be picky about buying only companies that will increase their earnings.
The gains have some analysts on the lookout for another tech bubble, like the one that yanked the Nasdaq from 5,132 in February 2000 down to 1,792 in October 2001.
"It's justifiable to worry about exuberance," said Sam Stovall, chief equity strategist at S&P Capital IQ. But he said he expects the broad market to rise another 3 to 10 percent in the next few months before hitting a ceiling and correcting downward.
"It's momentum, combined with too many investors on the sidelines," Stovall said. "As the market blows past these benchmarks, these investors selectively throw in the towel" and buy stocks whose prices are rising.
In corporate news:
- DreamWorks Animation SKG Inc. plunged 9 percent after the maker of "Kung Fu Panda" said its fourth-quarter profit fell 71 percent on weak DVD sales.
- News Corp. rose 2 percent after James Murdoch stepped down as executive chairman of News International, the U.K. newspaper arm at the center of the phone-hacking scandal. James is the youngest son of the 80-year-old media mogul Rupert Murdoch, News Corp.'s CEO.