The Nasdaq 100 Index hit a brand new all-time excessive Friday as massive tech shares rally after the Federal Reserve signaled that its aggressive rate-hikes to comprise inflation are over and cuts are on the desk for 2024.
The 100-member index rose 0.5% to 16,623.45, surpassing its November 2021 peak of 16,573.34. The transfer builds on the risk-on momentum that’s been in place since January and pushed the index on observe for its finest yr since 2009.
An virtually continuous run within the tech-heavy index since January has challenged defensive positioning within the group following a dismal 2022, forcing traders to play catch-up. The momentum behind the gauge’s finest opening six months to a yr ever sparked anew in November — and accelerated additional this week, when policymakers stated the rate-hiking cycle is actually over.
“The falling interest-rate environment has provided a huge support for the long-duration Nasdaq 100 Index,” stated Gary Bradshaw, a portfolio supervisor at Hodges Capital Administration in Dallas, Texas. “If you look at the fundamentals of the group, they’re strong for the big-tech names and other firms in the index, which should support a further advance.”
The Nasdaq 100 final hit a report shortly after Fed Chair Jerome Powell retired the word ‘transitory’ when describing inflation. Policymakers’ whatever-it-takes method to reign in value pressures whipsawed shares throughout the board the next yr, but it surely hit the tech-heavy Nasdaq 100 Index — which misplaced a 3rd of its worth — significantly exhausting.
This yr’s revival has come on the heels of optimism over synthetic intelligence that’s fueled a triple-digit rally within the Magnificent Seven gauge of tech titans. Optimism that the Fed’s “dot plot” now signifies a sharper tempo of price cuts in 2024 in comparison with September solely added gas to the momentum.
“Technology is still the leader for US equities,” stated Mary Ann Bartels, chief funding strategist at Sanctuary Wealth. “AI is going to be transformative in terms of productivity growth. Earnings are just broadly starting to turn mildly higher even though technology companies have held up well, so as long as we remain in a scarce earnings environment, growth will likely continue to outperform value next year.”
The Nasdaq 100 isn’t any stranger to lengthy stretches with no information — it went with out one for greater than 15 years following the dot-com bust. Earlier than its report shut on Friday, the gauge posted an 11% acquire in November, its finest month since July 2022.
