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Nasdaq 100 above 15,200 points amid pre-Fed calm

  • Nasdaq 100 moves slightly higher during the European session on Tuesday.
  • US housing data will be released today, although this data is not expected to change market sentiment ahead of the Fed’s decision on Wednesday.
  • The Fed is widely expected to leave rates unchanged on Wednesday, with the focus on the tone of Fed Chair Powell’s comments.

The index Nasdaq 100 moves slightly higher during the European session on Tuesday, amid calm markets ahead of the United States (US) Federal Reserve (Fed) decision on Wednesday. At the time of writing, the Nasdaq remains within the previous day’s tight range and is trading at 15,245, up about 0.15% on the day.

After the previous Friday’s near -2.00% drop, ending its second consecutive week in the negative, the Nasdaq remained in a tight range on Monday in the absence of major catalysts.

The focus of investors’ attention this week is on Wednesday’s Federal Reserve (Fed) meeting September 20, although the market already expects interest rates to remain unchanged. The CME Group’s FedWatch tool shows a 99% probability that the Fed will keep rates fixed at their current range of between 5.25% and 5.50%.

The Nasdaq is unlikely to move on another rate pause, but stocks could trade higher or lower Depending on how Fed Chairman Jerome Powell defines the economy. Any statement that central bank governors are contemplating further rate hikes is sure to send stock prices lower. At this time, markets are pricing the chances of a new rate hike at 40% by the end of the year.

Meanwhile, US housing starts and building permits data for August will be released during today’s American session, although this data alone should not be a market driver ahead of the Fed.

Nasdaq FAQ

What is Nasdaq?

Nasdaq is an American stock exchange that began as an electronic stock ticker. At first, the Nasdaq only offered over-the-counter (OTC) stock listings, but it later became an exchange as well. By 1991, the Nasdaq had grown to represent 46% of the entire US stock market. In 1998, it became the first US exchange to offer online trading. The Nasdaq also produces several indices, the most comprehensive of which are the Nasdaq Composite, which represents the more than 2,500 Nasdaq securities, and the Nasdaq 100.

What is the Nasdaq 100?

The Nasdaq 100 is a large-cap index composed of 100 non-financial companies on the Nasdaq Stock Exchange. Although it only includes a fraction of the thousands of stocks on the Nasdaq, it explains more than 90% of the movement. The influence of each company in the index is weighted based on market capitalization. The Nasdaq 100 includes companies highly focused on technology, although it also includes companies from other sectors and from outside the United States. The Nasdaq 100’s average annual return has been 17.23% since 1986.

How can I trade the Nasdaq 100?

There are several ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer Contracts for Difference (CFD) betting. For long-term investors, exchange-traded funds (ETFs) operate like stocks that mimic the movement of the index without the investor having to buy all 100 companies that comprise it. An example of an ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow you to speculate on the future performance of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.

What factors drive the Nasdaq 100?

There are many factors that drive the Nasdaq 100, but primarily it is the aggregate performance of its component companies, revealed in their quarterly and annual earnings reports. US and global macroeconomic data also contribute, influencing investor sentiment, which if positive, drives earnings. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100, as it affects the cost of credit, on which many companies largely depend. Therefore, the level of inflation can also be an important factor, as well as other parameters that influence the Federal Reserve’s decisions.

Nasdaq 100 technical analysis

At the time of writing, the Nasdaq 100 is trading around 15,240 points. If the index moves higher, it could encounter initial resistance at 15,268 (previous day’s high), before rising to the round level of 15,300 and the region of 15,400 points.

On the other hand, initial support is found in 15,145 (previous day’s low), before falling to 15,141 (September 7 low) and at the round level of 15,100.

Nasdaq 100 daily chart


Source: Fx Street

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