Nasdaq 100 Consolidates as Rising Yields Test Growth Stocks

NASDAQ 100 US6311011026

The Nasdaq 100 has encountered headwinds in the new year, pausing a robust rally from late 2025. A divergence is emerging within the index: highly valued technology and consumer discretionary names are facing pressure, while select semiconductor stocks post significant gains. Beyond daily fluctuations, a critical question looms: to what extent will climbing bond yields dampen the growth narrative that has long propelled this benchmark?

Closing out the week with a slight decline, the Nasdaq 100 extended its losing streak to five consecutive trading sessions on Friday. Over the past seven days, the index retreated approximately 1.7%, surrendering a portion of its powerful year-end advance.

Beneath the surface, a clear sector split is evident. Semiconductor companies demonstrated notable strength. Shares of Baidu, Micron, Intel, and Nvidia delivered double-digit percentage gains or at least showed resilience. This performance is supported by positive catalysts specific to the chip industry, including Baidu's planned public listing of its chip unit in Hong Kong and sustained demand for memory chips.

Meanwhile, utility stocks, perceived as defensive harbors, also advanced. They benefited from a more cautious investor sentiment that is shunning cyclical growth equities in favor of assets with stable income streams.

On the weaker side, electric vehicle maker Tesla found itself in the spotlight. Disappointing delivery figures for the end of the year weighed heavily on its share price. This, combined with pullbacks in Amazon and other major consumer and internet stocks, dragged down the index's heaviest constituents.

The Interest Rate Overhang

A persistent background factor remains the bond market. Rising yields on U.S. Treasury bonds increase the pressure on expensive growth stocks, as future earnings are discounted at a higher rate. The Nasdaq 100 felt the full effect of this dynamic during the first complete trading week of the year.

While the Dow Jones Industrial Average managed gains on Friday, lifted by industrial and banking stocks, the technology-heavy Nasdaq 100 lost ground. This divergence signals an ongoing rotation: capital appears to be flowing out of pricey tech and consumer names and into more classically valued sectors like industrials and financials.

Institutional investors seem to be consciously de-risking. Their activity focuses on:
* Reallocating capital away from mega-cap stocks such as Tesla and Amazon.
* Increasing exposure to selected growth niches, notably semiconductors.
* Utilizing options for hedging ahead of key economic data releases.

This cautious positioning aligns with a market seeking clarity on the labor market and inflation outlook before the next Federal Reserve interest rate decision.

Technical Perspective: Signs of Strain

From a technical standpoint, the five-day decline is leaving its mark. Trading near 25,200 points, the Nasdaq 100 sits just below its 50-day moving average and roughly 3% below its 52-week high of 26,068 points. However, the index remains nearly 50% above its April annual low, confirming that the primary long-term uptrend is still intact.

The 14-day Relative Strength Index (RSI) reads a neutral 55.2. The market is far from oversold conditions, which, technically speaking, leaves room for further near-term correction before a stronger rebound becomes likely. The 25,000-point level now serves as a crucial short-term psychological support zone.

The 200-day moving average runs significantly lower, around 24,100 points. With a cushion of over 4%, the intermediate-term trend stays positive, even as short-term selling pressure dominates.

Outlook: All Eyes on Economic Data

The macroeconomic calendar takes center stage in the coming week. Upcoming U.S. employment data will be particularly pivotal, likely influencing the Federal Reserve's assessment of its interest rate path for early 2026. Surprisingly strong numbers could push yields higher, intensifying pressure on growth stocks. Conversely, weaker data might fuel hopes for earlier rate cuts.

For the Nasdaq 100, the stakes are clearly defined. In the near term, stability around the 25,000-point mark will determine whether the current soft patch remains a mere consolidation within a longer-term uptrend or deepens into a more significant correction.