The mania is focused on a few stocks. Half of all Nasdaq stocks are down for the year. The December rush gained momentum as shares of Microsoft recovered from the company's loss of a major court ruling to government antitrust enforcers. That's a bull market mentality. What is worrisome is that interest rates have been rising and are likely to be pushed higher by the Federal Reserve if Y2K problems are few, says John Manley of Salomon Smith Barney.
Stocks never climb for long when rates are rising.
But Hill doubts that's enough to hold up the stocks, especially some of the big winners. Investors may be confusing tech's promises for the economy with the prospects for its stocks, says strategist Richard Bernstein of Merrill Lynch. And as the market throws money into the sector, the number of competitors only increases.