The Nasdaq 100 and the QQQ ETFs are in a strong bull run and trading at a record high as investors embrace a risk-on sentiment amid the ongoing ceasefire between the United States and Iran. They have soared in the last four consecutive weeks and are now hovering at their all-time highs. This article explores some of the top catalysts for the index and its top ETFs.
Nasdaq 100 in focus ahead of big-tech earnings
The Nasdaq 100 Index and its ETFs, which track the biggest technology companies in the US, will be in focus as they publish their results. Microsoft, Amazon, Google, Meta Platforms, and Apple, which are part of the Magnificent 7, will publish their numbers this week.
Other top technology companies like Qualcomm, Rivian, Twilio, Block, Atlassian, and Roblox will publish their numbers. In all, more than two thirds of companies in the S&P 500 Index will publish their numbers this week.
There are signs that the earnings will be stronger than expected. For example, data shows that the average earnings among the 28% of companies that have published their numbers so far has been 15%, higher than the expected 13%.
This week’s results by the big-tech companies are important because they are the biggest names in AI spending. As such, their numbers will show whether they are continuing to spend and whether the return on investment (RoI) is showing.
A good example of this is what happened in the last earnings report in which the MSFT stock crashed after hinting that it will boost its AI capital expenditure to over $100 billion this year.
The upcoming tech earnings will show whether software companies are really endangered from the ongoing AI growth. Early signs show that some companies like ServiceNow and IBM are at risk.
QQQ ETF to react to Federal Reserve interest rate decision
The other key catalyst for the Nasdaq 100 Index is tthe upcoming Federal Reserve interest rate decision on Wednesday. This will be the farewell decision by Jerome Powell.
The consensus view is that the bank will leave interest rates unchanged between 3.50% and 3.75%. This view is based by the fact that inflation continues to rise and the labor market improved in March.
The last report showed that the headline Consumer Price Index (CPI) rose to 3.3% in March as energy prices soared. Unfortunately, the situation will get worse unless the ongoing Iran war ends. For one, data shows that airfares and fertilizer prices have continued rising.
A dovish tone will be bullish for the Nasdaq 100 Index, while a hawkis tilt will point to a pullback. In line with the Fed, the index will react to some notable macro data like consumer confidence and GDP report.
US-Iran war progress
The other main catalyst for the Nasdaq 100 Index will be an update of the ongoing US and Iran war, which is now in an open-ended ceasefire. It is unclear what the next stage will be as the two sides have refused to meet. Iran, in particular, has warned that it was pointless to meet with the US side as long as the blockade continues.
One potential option is where the US decides to attack another attack to put pressure on Iranian leaders. Iran may also decide to launch a pre-emptive attack to provoke the US and Israel.
The implication of all this is a prolonged war that will push crude oil prices much higher and the stock market lower.
