NAS100 Hits Record Highs Ahead of Netflix & Tesla

NAS100 Analysis

Last week we saw a series of Fed speakers pointing once again to lower rates, but at the same time adopting a reserved stance, pushing back against aggressive market bets. Governor Waller for instance sees "no reason to move as quickly or cut as rapidly as in the past"^[1], while Mr Bostic who is also a voter this year expects this process to begin in the third quarter ^[2]. This has tempered marker pricing with CME's FedWatch Tool now assigning the highest probability in the first cut materializing in May (from March previously). ^[3]

Despite this pullback in expectations, markets still see 125-150 basis points of cuts, against the Fed's December projection, which imply 90 bps. Wall Street did not really mind from this repricing as they remains convinced of a soft landing and easier money ahead, while hoping that the tech sector will remains a key driver.

As a result, NAS100 rallied and tries to surpass 17,500 for the first time in history. On the other hand, the move is stretched and there is risk of a pullback. But strong catalyst would be needed for a breach sub-EMA200 moves (at around 14,550).

Markets now turn to the PCE inflation data on Friday and the GDP figures a day earlier. They also look forward to the quarterly reports from Netflix (Tuesday) and Tesla Motors Inc (Wednesday), which kick things of for Big Tech. The streaming giant reasserted its leadership last year and saw an acceleration in subscribers and revenues in Q3, largely due to the password sharing crackdown and the ad-supported tier. The firm expects to return to double-digit revenue growth in the reported quarter. EV pioneer managed to pick up pace in Q4, hitting record delivery and production levels ^[4], which may help it stop the declining profitability.