Tech-led Rally Pushes Nasdaq 100 to Record High, US Futures Point to Further Gains
The Nasdaq 100 reached a record high on Thursday, driven by a rally in the technology sector. This surge has led to positive indications for further gains in US futures on Wall Street. Contracts on the Nasdaq 100 climbed about 0.7%, while S&P 500 futures were up 0.4%. Chipmakers, in particular, saw significant gains in pre-market trading, with Advanced Micro Devices Inc. climbing 2% and Intel Corp. up 1.2%. Texas Instruments Inc. also rose more than 2% after maintaining its quarterly dividend.
The Stoxx Europe 600 index also experienced a slight increase of 0.1%, reducing its loss for the week to 1.2%. The technology sub-sector saw further advancement, driven by Taiwan Semiconductor Manufacturing Co.’s positive outlook, which fueled hopes for a global recovery in chip sales. However, Swiss electrical-equipment maker ABB dragged industrials lower after revealing that US lawmakers are reviewing its operations in China.
The dip in Treasury yields and the dollar followed a week of frenetic repricing of the policy outlook. Investors are now closely watching Federal Reserve speakers for further cues on the timing and extent of rate cuts. Traders have become less optimistic about rate cuts in March, with the probability dropping from almost 80% at the end of last week to little more than a coin toss currently.
The Asian market also experienced gains, with semiconductor stocks driving MSCI Inc.’s Asia Pacific gauge higher for a second day. Taiwan Semiconductor Manufacturing Co. saw a significant jump of more than 6% after its American depository receipts surged almost 10% to close at the highest level since February 2022.
Federal Reserve officials have urged caution in light of potential impacts from unpredictable events such as elections and global conflicts. BlackRock International Ltd. expects the Fed to start cutting rates in June, with senior investment strategist Laura Cooper predicting 75 to 100 basis points of reductions by year-end.
Bank of America Corp. strategists have noted that investors are returning to growth, technology, the AI bubble, and the so-called Magnificent Seven group of stocks, including Apple Inc. These stocks were the leaders of the Nasdaq 100’s 54% rally last year and are once again traders’ top picks amid elevated Treasury yields. Nvidia Corp., Microsoft Corp., and Meta Platforms Inc. are currently the top gainers on the tech-heavy gauge.
In other markets, oil prices remained steady after reaching a three-week high due to escalating tensions in the Middle East. Gold, on the other hand, is heading for a weekly loss as Fed rate-cut bets are recalibrated.
Overall, the tech-led rally has propelled the Nasdaq 100 to new heights, with positive indications for further gains in US futures. Investors are closely monitoring central bank policies and rate cut expectations, while also keeping an eye on geopolitical developments that could impact market stability. The return to growth and technology stocks suggests continued optimism in these sectors, despite elevated Treasury yields.
