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Nasdaq 100 set to react to Jackson Hole clues

As you may already know, tech stocks are highly sensitive to shifting expectations surrounding US interest rates.

Notice how the tech-heavy Nasdaq 100’s stunning rally in 2021 began sputtering towards the tail-end of last year, in anticipation of the then-looming Fed rate hikes.

And sure enough, tech stocks careened in the first half of 2022, as the Fed began its ongoing rate hike cycle back in March this year.

Nasdaq 100 set to react to Jackson Hole clues

And tech stocks remain beholden to the outlook for the Fed’s benchmark interest rates (a.k.a. Federal Funds Target Rate).

Which brings us to the Jackson Hole Economic Symposium, due to kick off today.


What is Jackson Hole and why it matters?

This economic conference, held annually in Jackson Hole, Wyoming, features the gathering of top central bankers, economists, academicians, and even finance ministers. During this year’s event, set to be held from August 25th- 27th, these top minds will discuss the major issues facing the global economy, and how policymakers could and should respond.

And markets have a tendency to move trillions of dollars across global financial markets, based on what is said (or at times, not said) by these influential policymakers.

This week, Fed Chair Jerome Powell’s scheduled speech tomorrow (Friday, August 26th) at 2:00 PM GMT is set to take centre stage.


What are markets currently expecting?

Recall that, since March, the Fed has already hiked by 225 basis points (bps).

Looking ahead to the next FOMC policy decision due September 21st, markets are forecasting a 66.8% chance of yet another 75bps hike – which would mark a third successive hike of such supersized proportions (historically, major central bankers adjust their benchmark rate at 25bps per meeting).

Also, looking at the Fed Funds Futures (which is used to derive predictions for Fed rate hikes in the future), markets expect the benchmark rates to peak at 3.75% by March, from the current 2.50%, before the Fed may have to start lowering interest rates again.

All that implies another 125bps hikes left in this cycle, including the potential 75bps hike next month.


How the Nasdaq 100 may react to Powell’s clues on Friday?

Ultimately, markets wish to get the latest clues about how high the Federal Reserve will raise US interest rates.

  1. The Nasdaq 100 may rush towards its 100-day simple moving average (SMA) for support around the 12,600 region, if Powell suggests that the Fed will indeed press on with yet another 75bps hike in September, while also prompting markets to raise the forecasted peak for the ongoing Fed rate hiking cycle above the earlier-mentioned 3.75%.

    Stronger support for the Nasdaq 100 should arrive around the 12,395 mark, where the 23.6% Fibonacci retracement line lies from its November through June descent.


However, given the palpable anxiousness already witnessed across asset classes in the lead up to this week’s Jackson Hole symposium, the risk is that Powell may actually sound less hawkish than feared.


  1. Any ensuing relief that the Fed may have to be less aggressive than anticipated, considering the cracks that are starting to show in the US economy, may result in an unwinding of recent declines for tech stocks.

    That may set the Nasdaq 100 back on a path to revisit its recent peak at 13,730.1, provided this tech-heavy index can reassert itself back above the 38.2% Fib level at 13,231, as well as the early-August peak of 13,405.5.

    Stronger near-term resistance set to arrive around the 13,859 – 13,907 region, where the 200-day SMA and the 50% Fib retracement level reside.


Nasdaq 100 set to react to Jackson Hole clues



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