Tech Stocks Propel Nasdaq 100 to Unprecedented Heights

The Nasdaq 100 index surged to a historic peak in the previous session, closing at 24,092.19 after a robust gain of 99.63 points, or 0.42%. This upward trajectory was primarily fueled by mounting anticipation of interest rate cuts from the Federal Reserve, even as other major market indices showed signs of strain.

Sector Rotation Amplifies Tech Focus

Trading activity highlighted a pronounced shift of capital into technology-oriented equities. The Nasdaq 100’s continued ascent contrasted with a nearly flat S&P 500 and a declining Dow Jones Industrial Average. Throughout the day, the index reached a high of 24,137.06 points and found a floor at 23,983.63 points.

Sustained buying interest in major tech conglomerates points to robust investor confidence in the sector. Concurrently, the subdued level of the VIX volatility index indicated the rally was not being driven by market apprehension.

Fed Policy Expectations Outweigh Bond Yield Concerns

The bullish sentiment was largely driven by prospects for a more accommodative monetary policy from the Fed. Weaker-than-anticipated September consumer sentiment data reinforced the view that the central bank may lower rates to support a potentially slowing economy.

These expectations managed to eclipse investor worries about climbing bond yields, with the benchmark 10-year Treasury note yield advancing to 4.07%.

Should investors sell immediately? Or is it worth buying NASDAQ 100?

Key Stocks Driving the Rally

Significant momentum was generated by several standout performers:

• Warner Bros. Discovery shares skyrocketed amid takeover speculation involving Paramount Skydance.
• Tesla continued its recent rally, leaping more than 7%.
• Microsoft gained nearly 2% following the resolution of an EU antitrust case.
• Micron Technology and Palantir also ranked among the notable advancers.

In a contrasting move, Arista Networks experienced profit-taking. The concentrated nature of the tech surge was evident, with eight of the eleven S&P 500 sectors trading in negative territory by midday.

Technical Indicators Signal Robust Momentum

From a technical standpoint, the index is firmly positioned within an upward trend, trading above all its key moving averages. The Relative Strength Index (RSI) reading of 67.38 signifies strong buying pressure, though it is approaching overbought conditions.

The breach of previous resistance levels has now cleared a path toward the next significant hurdle near the 24,200-point mark. The former record-high zone, spanning 23,950 to 24,020, is now expected to serve as a crucial support level.

All eyes are now on the upcoming Federal Reserve meeting. Market pricing already reflects a high probability of a 25-basis-point rate cut, meaning any deviation from this expectation could trigger significant market volatility.