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Nasdaq 100: New All-Time High Driven by Rate Cut Expectations

December 12, 2024 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.

"The Nasdaq 100 has reached a new all-time high, surpassing the 21,700-point mark, following the release of November inflation data in the United States. This rally, which represents a nearly 2% daily gain, comes amid growing expectations for a 25-basis-point rate cut by the Federal Reserve next week.

Although inflation rose to 2.7% annually, up from 2.6% in October, the report lacked surprises. This scenario has reinforced the perception that monetary policy could continue to normalize toward 2025, despite potential uncertainties linked to the new administration of Donald Trump, whose proposals, such as tariffs, could impact inflation dynamics.

The technology and communications sectors led the gains in the U.S. stock market, significantly boosting the Nasdaq 100 due to their high representation in the index. Companies like Alphabet, Broadcom, and Tesla stood out with notable moves: Alphabet surged 5% on breakthroughs in quantum computing, while Broadcom jumped another 5% on rumors of an AI chip collaboration with Apple.

Additionally, economic data align with a seasonally favorable period for equity markets. This, combined with expectations of lower financing costs, is creating a positive environment for risk.

Looking ahead, investors will turn their attention to the Fed meeting next week, seeking clues about the monetary policy path for 2025. While the possibility of further rate cuts remains high, Fed Chair Jay Powell has emphasized a relatively cautious approach.

The environment is also influenced by political factors. Trump's tariff proposals could challenge the progress made on inflation.

In summary, the Nasdaq 100's record high reflects an optimistic environment bolstered by lackluster inflation surprises and rate cut expectations. However, the long-term outlook remains subject to political risks and the Fed's careful balancing act to sustain economic stability."

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