All Eyes on the Fed as Nasdaq 100 Holds Its Ground

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The technology sector demonstrated notable resilience on Tuesday. Despite rising bond yields weighing on other major US indices, the Nasdaq 100 managed to eke out a modest gain. The market's focus is now squarely fixed on a single event: the extent to which today's Federal Reserve interest rate decision will propel the tech-heavy index in either direction.

Currently trading at 25,682 points, the Nasdaq 100 remains just shy of the record territory it explored in recent weeks. The benchmark has posted a substantial year-to-date advance of over 22 percent, confirming that its overarching uptrend remains intact, albeit having noticeably decelerated in recent sessions.

Tuesday's trading unfolded against a backdrop of tension between robust economic indicators and fears of a more restrictive monetary policy. The catalyst was a surprisingly strong JOLTS report on the US labor market, which showed job openings jumping to 7.67 million, significantly surpassing expectations. A labor market this sturdy signals continued economic momentum—precisely the data the Fed is monitoring closely in its inflation fight.

The immediate market reaction was a climb in the yield on the 10-year US Treasury note toward 4.19%. Typically, such a move pressures high-growth tech stocks by increasing the discount rate on future earnings. However, the Nasdaq 100 defied this pattern, recovering from an intraday dip to just above 25,500 points to trade near the day's peak by the close.

Concurrently, the CBOE Volatility Index (VIX) held at subdued levels. Beneath the surface, however, caution was evident in the options market, where numerous participants hedged against the possibility of a hawkish message from Fed Chair Jerome Powell.

Index Dynamics: Leaders and Laggards

The Nasdaq 100's ability to overcome a skeptical bond market was primarily driven by the performance of specific heavyweight constituents and thematic trends.

Key supportive forces included:

• AppLovin (APP): Shares advanced approximately 4%. The stock continues to benefit from sustained optimistic forecasts for advertising and ad-tech budgets, cementing its position as one of the index's stronger performers this quarter.
• Tesla (TSLA): The electric vehicle maker added over 2%. Investor confidence remains anchored by expectations of solid year-end delivery figures, making the equity a crucial stabilizer for the index.
• Alphabet (GOOGL): Gained more than 1%. Market analysts point to a persistent valuation gap when compared to other members of the "Magnificent Seven" cohort.
• Airbnb (ABNB): Rallied roughly 3% after data indicating heightened travel activity during the holiday season helped the stock break out of a prior weaker phase.

On the opposite side, several major stocks exerted downward pressure:

• Meta Platforms (META): The stock declined about 1.5%, weighed down once again by emerging regulatory headlines from the EU that continue to challenge the company.
• Nvidia (NVDA): Shed a modest 0.3%. Despite supportive news regarding potential US approvals for H200 chip shipments to China, the stock saw profit-taking following its recent powerful rally.
• Micron Technology (MU): The chipmaker showed initial weakness but stabilized throughout the session—a sign of nervous sentiment within the semiconductor segment ahead of upcoming quarterly results.

In aggregate, the gains from AI and automotive-related tech stocks were sufficient to counterbalance the weaker components, nudging the index slightly into positive territory.

Technical Perspective: High-Level Consolidation

From a chartist's viewpoint, the Nasdaq 100 continues its constructive consolidation within a primary upward trend. Several key levels are in focus:

• Short-Term Pivot: The zone around 25,600 points currently serves as a central reference. The index's ability to close above this level on Tuesday is viewed by technical analysts as a near-term positive signal.
• Support: The first significant support lies near yesterday's intraday low, just above 25,500 points. A break below this level could open a path toward the 50-day moving average, which currently resides just above 25,300 points.
• Resistance: An area of resistance is building between 25,700 and 25,800 points. A decisive breakout above this band would clear the way for a renewed attempt at all-time highs, though it would likely require a catalyst in the form of a "dovish" Fed communication.

The 14-day Relative Strength Index (RSI) sits in neutral territory at approximately 55, indicating neither overbought nor oversold conditions and leaving room for a more pronounced move following the Fed's announcement.

The Fed Takes Center Stage

The decisive catalyst for today's trading will arrive at 2:00 PM Eastern Time (8:00 PM German time) with the release of the US Federal Open Market Committee's statement. Markets widely anticipate a 25-basis-point rate cut. However, the accompanying economic projections and the "dot plot" interest rate forecast are expected to be more consequential than the move itself.

Two critical points are under scrutiny:

• Labor Market and the 2026 Path: Should the Fed assign greater significance to the recent strength in labor market data and signal a "higher for longer" rate stance for 2026, technology stocks could face near-term pressure.
• Inflation Messaging: Conversely, if Chair Powell delivers clear signals that inflation remains on a sustainable path back to target despite economic resilience, it would argue for lower yields and could facilitate a breakout above the resistance zone near 25,800 points.

International markets have provided little directional guidance so far, with Germany's DAX and France's CAC 40 trading mixed in early action. A slightly firmer US dollar following the labor data also acts as a mild headwind for the earnings outlook of globally active US tech giants.

The path for the remainder of the session appears clear: Trading is likely to remain relatively quiet with limited volatility until the Fed decision is released. The subsequent reaction will largely depend on whether the index can defend its support around 25,500 points or, aided by a "rate-friendly" Fed message, launch its next assault on record territory.