We now have the answer to the question we posed this time last week (“Can Nasdaq 100 return to bull market?”).
The tech-heavy index has indeed climbed 20.3% since the closing price on 28th December 2022, which was then a two-year low, meeting the criteria of a 20% climb from a recent low to mark a “bull market”.
The Nasdaq 100’s year-to-date gains are also nearing 14%, much higher than other major US benchmark indices:
Why is the Nasdaq 100 climbing?
Markets now believe that the US Federal Reserve (a.k.a. the Fed) is almost done with its rate hikes.
Recall how tech stocks have been highly sensitive to Fed rate hikes that have been ongoing for the past 12 months.
However, the above narrative has changed this year, as markets price in a policy pivot by the US central bank.
At the time of writing, markets are forecasting an 89% chance that the Fed will CUT interest in September this year.
That’s in stark contrast to the thought of interest rates will move even higher this year in order for the Fed to quell stubbornly-elevated US inflation.
What’s next for the Nasdaq 100?
Speaking of inflation, the Fed’s preferred measure of inflation, the PCE Core Deflator is due to be released tomorrow (Friday, March 31st).
For the February data, this inflation measure is expected to have risen by 4.7% compared to February 2022.
This would match January’s year-on-year figure, lending credence to the idea that US inflation remains “sticky”, despite the 450 basis points in hikes that the Fed has already triggered since March 2022.
From a technical perspective …
The NQ100_m on the daily chart is now testing a key resistance area – the 38.2% Fibonacci level from its plummet between the November 2021 record high down to the October 2022 trough.
A sustained breach of the psychologically-important 13,000 mark may pave the way for the next resistance level derived from the August 2022 cycle peak at 13,206.3.
However, if this index relinquishes recent gains in light of hotter-than-expected inflation, the recent cycle low at 12,523.2 may offer immediate support.
Stock markets are finding some relief after the US debt limit deal was approved by the House, with the Senate’s vote now set to be a formality.
1 June 12:05
Nvidia enjoyed a huge surge in its share price after its results were released after the US stock market closed.
25 May 09:00
US tech stocks have been on a seemingly unrelenting uptrend for much of this year. The NQ100_m, which tracks the Nasdaq 100 index, is edging higher even after the Nasdaq 100’s gain of 1.2% yesterday (Wednesday, May 17th) fuelled by optimism that the US can avert a first-ever default.
18 May 13:43
Disney’s shares fell by 4.9% in Wednesday’s post-market session as the company released its latest quarterly earnings after US markets closed yesterday.
11 May 12:56
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