Tech Stocks Gain Momentum as AI and Corporate Deals Fuel Rally

NASDAQ 100 US6311011026

The Nasdaq 100 index closed the week on a strong note, buoyed by a combination of corporate developments and sustained investor appetite for growth-oriented sectors. Despite a modest rise in bond yields, market sentiment remained firmly risk-on, with technology and semiconductor stocks leading the charge.

Friday’s trading session was influenced by the quarterly "triple witching" event, involving the simultaneous expiration of stock options, index futures, and index options. This typically amplifies trading volume and volatility. The tech-heavy index saw consistent demand throughout the day, effectively recouping losses from earlier in the week.

A significant positive catalyst was the resolution of the protracted TikTok dispute in the United States. Oracle confirmed a strategic joint venture with Silver Lake and Abu Dhabi investor MGX to oversee TikTok’s U.S. operations. Oracle will take a 15% stake and assume responsibility for data security. This agreement substantially mitigates regulatory overhangs and reinforces Oracle's position as a critical infrastructure provider.

Concurrently, shares in the artificial intelligence and semiconductor space advanced further. The usual inverse relationship between rising interest rates and tech stock weakness did not materialize, even as the yield on the 10-year U.S. Treasury note edged higher. A decline of nearly 2% in the VIX volatility index pointed to a calmer underlying mood in U.S. equities.

Sector Performance: Standouts and Laggards

Gains within the Nasdaq 100 were concentrated in technology and travel-related companies, while certain consumer-facing stocks underperformed.

Notable contributors to the index’s rise included:

• Oracle: Shares surged following confirmation of its pivotal role in the TikTok deal.
• Micron Technology: The memory chipmaker extended its rally after posting robust quarterly results and an optimistic forecast for AI-driven demand.
• Carnival: The cruise operator benefited from the reinstatement of its dividend and record full-year profits, signaling a robust recovery in the travel sector.
• Nvidia and Broadcom: Both semiconductor giants posted solid gains, contributing significantly to the day's movement due to their substantial index weightings.

On the downside, Nike weighed on sentiment after warning of softer sales in China and margin pressure from potential tariffs. FedEx also declined, pulling down related logistics and technology stocks.

Technical Perspective Maintains a Bullish Tone

From a technical standpoint, the Nasdaq 100 has absorbed recent pullbacks. Closing the week firmly above the 25,300 level, the index now sits just a few percentage points below its 52-week high of 26,068.92. It has rallied nearly 50% from its April low of 16,975.60, underscoring a powerful uptrend that has persisted throughout the year.

Key technical observations:

• The psychologically important 25,000-point zone, tested multiple times during the week, has solidified as a near-term support level.
• The index is trading above its 50-day moving average and maintains a comfortable 6% buffer above its 200-day line—a configuration consistent with a healthy bullish trend.
• The 14-day Relative Strength Index (RSI) reading of 55.2 sits in a neutral-to-positive range, indicating neither overbought conditions nor immediate weakness.

With a year-to-date advance exceeding 21% and a twelve-month gain of approximately 20%, the technology index remains one of the top performers among major U.S. benchmarks.

Week Ahead: Inflation Data and Holiday Trading

Trading liquidity is expected to thin in the coming week ahead of the Christmas holiday. Market focus now shifts to the release of the U.S. Personal Consumption Expenditures (PCE) price index data, a key inflation gauge for the Federal Reserve and the final major macroeconomic catalyst of the year.

If the Nasdaq 100 sustains its recent gains above the 25,000–25,300 support zone, a further move toward the 25,500 level and potentially toward its record high appears plausible. However, a break below this support would suggest investors are turning more cautious at year-end and locking in profits from the strong 2024 rally.