The Nasdaq 100 has experienced a remarkable surge since the beginning of 2023, nearly doubling in value and adding a staggering $14 trillion in market capitalization. Despite concerns over rising bond yields, Evercore ISI’s Rich Ross anticipates this upward trajectory to persist.
Last week, Treasury rates climbed to multi-month highs as investors scrutinized economic data for insights into the Federal Reserve’s potential interest rate adjustments following President Trump’s election victory. The election outcome fueled speculation that Trump’s economic policies, such as significant import tariffs and large-scale deportations of undocumented workers, could trigger inflation and hinder economic growth, thereby limiting the Fed’s ability to reduce borrowing costs. This scenario has dampened the attractiveness of rate-sensitive sectors, particularly those with high valuations like technology.
However, the yield on the 10-year US Treasury note has since retreated after reaching a relative strength level that typically indicates a reversal. Combined with favorable technical indicators, both the Nasdaq 100 and the S&P 500 appear poised to achieve new all-time highs in the first quarter, according to Ross, Evercore ISI’s head of technical analysis.
“Technology remains exceptionally well-positioned to continue leading the market higher,” Ross asserted.
As of Tuesday, the tech-heavy Nasdaq 100 has traded above its 200-day moving average for 467 consecutive sessions – the second-longest streak of its kind since the index’s inception four decades ago, based on data compiled by Bloomberg.
The index is currently trading approximately 10% above this long-term support level, signaling relative stability to technical analysts who rely on daily averages and other metrics to assess stock market momentum. This follows a period in July when the benchmark surged as much as 20% above the 200-day moving average – a level that historically preceded market corrections.
The upcoming weeks will be crucial for the stock market as major technology companies prepare to release their quarterly earnings reports, and the Federal Reserve’s next policy decision is scheduled for January 29th. With earnings season already underway, investors are keen to understand corporate leaders’ outlooks for the coming months. Next week marks the busiest period of the earnings season, with reports expected from industry giants such as Apple Inc., Microsoft Corp., and Meta Platforms Inc. The market’s response to these earnings reports and the Fed’s policy announcement will likely shape the direction of the Nasdaq 100 and the broader market in the near term.
