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Nasdaq 100 Hits New Highs As Interest Rate Sentiment Provides Fuel

The Nasdaq 100 Index ended the day marginally up on Tuesday, closing the session at 20,453 points after hitting a new all-time high of 20,543 earlier in the day. The index has risen by 3.9 percent since the beginning of July, underlining a strong buying momentum amidst dovish-leaning Fed interest rate sentiment.

Markets have raised their bets on Fed interest rate cuts in September, and this week particularly has much in store in relation to that. Fed Chairman Jerome Powell started giving his testimony before the Congressional committee on Banking, Housing and Urban Affairs.  He will continue his two-day Semiannual Monetary Policy testimony on Wednesday, and investors will be keen to pick up cues on potential interest rate changes.

Although he stated that the US economy was no longer overheated, Powell’s speech on Tuesday was largely guarded and received muted responses from the markets. However, should his tone on Wednesday remain unchanged, traders will turn their attention to the US Consumer Price Index (CPI) figures set for release on Thursday.

After the inflation rate cooled in May, a second successive decline could all but confirm interest rate slash in September. That could inject fresh impetus into the markets and send the Nasdaq 100 Index higher. However, investors may opt to tame their appetite in Wednesday’s intraday session if Powell gives hawkish hints.

Technical analysis

The momentum on the Nasdaq 100 Index favours control by the bulls if the action stays above 20,445. The upside momentum will likely encounter the first resistance at 20,455, but extended control by the buyers could send the Index further up to test 20,470. On the other hand, if the Index moves below 20,445, it could swing control to the sellers. The downward momentum will likely find the first support at 20,430, and a breach below that mark will render the upward narrative invalid. Also, it could strengthen the selling momentum to send the index to test 20,420.