Nasdaq 100 Poised for Continued Rally Despite Bond Yield Concerns
The Nasdaq 100 Index has witnessed a remarkable surge since the start of 2023, adding an impressive $14 trillion in value. Despite the resurfacing of bond yield fears, Evercore ISI's Rich Ross remains optimistic about the rally's continuation.
Ross dismisses concerns over rising bond yields, which surged to multi-month highs last week. He argues that positive technical signals and a retreat in 10-year yields after a relative strength reading indicated a pullback suggest further upside for the Nasdaq 100 and S&P 500 Index.
"Technology remains in an outstanding position to continue leading the market higher," Ross said. The Nasdaq 100 has traded above its 200-day moving average for 467 sessions, marking the second-longest streak since the index's inception.
Analysts also observe the Nasdaq 100 ETF (QQQ) for potential support levels. John Kolovos of Macro Risk Advisors identifies support between $485 and $495, which aligns with QQQ's November lows. He views pullbacks within these thresholds as buying opportunities.
"Falling yields are beneficial for market breadth and equity-market participation," Kolovos said.
Technical analysts closely monitor Apple's performance as it nears its 200-DMA. After briefly surpassing 4.8%, the 10-year Treasury yield has since declined to around 4.57%, providing some relief.
Despite the recent yield retreat, Ross believes semiconductor stocks, particularly those favored by Evercore ISI, will continue to outperform software shares. Data shows that the VanEck Semiconductor ETF (SMH) has outperformed the iShares Expanded Tech-Software Sector ETF (IGV) in recent weeks.
"Higher rates disproportionately impact smaller caps and cyclicals. When rates ease, the initial response is to buy back these sectors," Ross said. "Ultimately, the market will revert to Big Tech's solid secular trends, significant cash holdings, and competitive advantages."