Nasdaq 100 at yearly high, struggles with 16,000 level ahead of FOMC minutes

• Nasdaq 100 at annual highs around 16,000 points amid expectations that the Federal Reserve has ended its rate hike cycle.
• At 16,000 points, the Nasdaq 100 is up more than 45% this year.
• Today’s focus will be on the minutes of the last Federal Reserve meeting.

The Nasdaq 100 index is struggling to extend the upward move above the 16,000 level. Before the start of the American session on Tuesday, the Nasdaq is retreating towards 15,980 points, losing about 0.30% on the day, after closing on Monday at 16,026, at new annual highs and at levels not seen since January 2022.

Looking at the daily chart of the Nasdaq you can see strong bullish momentum over the past three weeks, since falling to a low of 14,057 on October 26. Since then, the index has moved higher to peak at the 16,056 level on Monday. The movement from the mentioned low to high constitutes a gain of 14.22%.

Nasdaq 100 daily chart

The recovery began after the US Federal Reserve (Fed) decided to leave its interest rate unchanged in the range of 5.25%-5.50%. Subsequently, speculation about possible Fed interest rate cuts intensified after the publication of lower-than-estimated inflation figures, which reinforced expectations that the Federal Reserve has finished raising interest rates.

Following the release of US inflation data, market participants appear convinced that the Fed will not raise interest rates again and have been weighing the possibility of rate cuts during the first half of 2024.

At the time of writing, there is a 100% chance that the Fed will leave rates unchanged at its December meeting, according to the CME Group’s FedWatch tool. Furthermore, the odds of a rate cut are 30% for the March 2024 meeting and over 60% for the May meeting:

Fed rate probabilities for May 2024 meeting

Turning to this week’s macroeconomic calendar, today’s focus will be on the release of the minutes from the latest meeting of the Fed’s Federal Open Marking Committee (FOMC). Given that weak inflation data, which caused markets will begin to value a change in the Fed’s monetary policy next year, were published after said meeting, the comments in this publication are likely out of date.

It is worth remembering that on Thursday the US markets will remain closed for the Thanksgiving holiday.

The Nasdaq is currently in the zone of annual highs around 16,000 points, rising 46.97% since the beginning of the year at 10,886 points.

Nasdaq technical levels