Nasdaq 100, Inflation, US CPI, Federal Reserve – Talking Points
- Nasdaq 100 Index falls almost 1.5% as markets eye US CPI data
- US inflation due on Friday, some experts forecasting potential for 7% reading
- Buzzfeed, Peloton, AMD some of the largest decliners in the Nasdaq 100 Index
The Nasdaq 100 Index shed nearly 1.5% on Thursday as market participants positioned themselves ahead of Friday’s highly anticipated U.S. CPI report. Equities had powered higher over the last few sessions, as fears eased in regard to the severity of the new Omicron Covid variant. Thursday’s decline ends a three day streak of gains for the Nasdaq 100 Index.
There were some notable decliners in the session among Nasdaq constituents, with Tesla falling 6.1% and Peloton shedding over 11%. Buzzfeed, which recently went public via SPAC, declined a whopping 23% on Thursday.
U.S. Economic Calendar
Courtesy of the DailyFX Economic Calendar
Equities appear to have a significant amount of event risk on the horizon, with inflation data and next week’s Federal Reserve policy meeting firmly in sight. Hawkish guidance on interest rates or the potential announcement of a quicker taper could present serious road bumps for equity markets that sit just below all-time highs. Elsewhere, the official defaults of both Evergrande and Kaisa Group Holdings in China could weigh on global sentiment.
Nasdaq 100 1 Hour Chart
Chart created with TradingView
Friday’s inflation print could represent an inflection point for US equities, with a hot print potentially pulling forward expectations for Fed rate hikes. If the market believes the Fed will raise rates sooner, this could prompt a shift back into the “reflation trade” and out of speculative tech names, further weighing on the Nasdaq 100 Index.
A strong print could pave the way for a more urgent policy reaction from the Fed, culminating in earlier than expected rate hikes to cool inflation. Ahead of tomorrow’s report, some economists are forecasting the headline print to exceed 7%. Should core and headline exceed market expectations, the Nasdaq 100 Index may be tempted to fill the gap from earlier this week.
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— Written by Brendan Fagan, Intern
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