Tech Stocks Rebound as Rate Cut Hopes Intensify

A surprising shift in market sentiment has provided the Nasdaq 100 with a much-needed resurgence. The catalyst? Paradoxically, it was a batch of disappointing economic data. A significant drop in consumer confidence has reinvigorated investor appetite for technology shares, fueling speculation that the Federal Reserve may be compelled to lower interest rates sooner than anticipated. However, with critical inflation data due for release, the sustainability of this rally remains uncertain.

Trading activity on Wednesday marked a decisive turnaround for the technology-heavy index. The primary driver was a report showing U.S. consumer confidence unexpectedly plummeting to a six-month low. While typically a negative economic indicator, this news was warmly received by equity investors. The combination of gloomy sentiment and signs of cooling inflation has caused market expectations for a December interest rate cut to surge to nearly 90%.

The bond market's reaction was immediate and clear. The yield on the 10-year U.S. Treasury note retreated to 4.00%. This decline in borrowing costs acted as a starting pistol for interest-rate-sensitive growth stocks, which had recently been under pressure. Although trading volume was somewhat subdued due to the approaching holiday, market breadth was strong, with advancers significantly outnumbering decliners.

Should investors sell immediately? Or is it worth buying NASDAQ 100?

Key Inflation Data Looms Before Holiday

From a technical perspective, the Nasdaq 100 has reclaimed crucial ground, stabilizing around the 25,151-point level and firmly above the psychologically significant 25,000 mark. The Relative Strength Index (RSI) has exited oversold territory, suggesting potential for further short-term gains.

A significant test awaits, however. Before markets close for the Thanksgiving holiday, a flood of economic data is scheduled for release. All eyes will be on the Core PCE Price Index, the Federal Reserve's preferred inflation gauge. An unpleasant surprise in these figures could abruptly halt the current recovery rally, a risk compounded by the likelihood of thinning market liquidity throughout the trading session. Investors should brace for potential volatility before the holiday calm sets in.

Semiconductor Sector Sees Intensifying Competition

Beneath the broader market rebound, a fascinating rotation is occurring within the technology sector, particularly among semiconductor companies.

• Alphabet Inc. emerged as a notable winner. The parent company of Google saw its shares lifted by reports that Meta Platforms might begin utilizing Google's custom-designed AI chips, signaling a potential challenge to established industry leaders.
• Nvidia & AMD: This very news has placed pressure on these former high-flyers. Concerns are mounting that major technology firms may increasingly develop in-house hardware solutions, weighing on the share prices of these specialized chip designers.
• Analog Devices & Keysight: Away from the pure AI spotlight, these companies impressed the market with robust quarterly earnings, distinguishing themselves positively from the mixed performance seen elsewhere in the mid-tier semiconductor segment.