Nasdaq 100, US CPI - Talking Points
- Nasdaq 100 futures tumble on hot inflation report
- Tech stocks under pressure as Treasury yields soar
- US CPI comes in hotter than expected, 8.3% YoY vs. 8.1% exp.
The Nasdaq 100 index is under significant pressure during Tuesday’s session following a hotter-than-expected CPI print this morning. The CPI gauge for August came in at 8.3% YoY, while core came in at 6.3%. Both readings came in above market expectations, which saw risk dramatically sell off as traders repriced Fed expectations. While 75 basis points was effectively baked into the cake for next week’s FOMC policy meeting, this print opens the door for larger rate hikes in November and potentially December. The sharp reversal in risk assets comes after a strong week leading into the print, with US stocks posting 4 positive sessions in the run-up.
Nasdaq shares fell the hardest, as high-valuation names felt the brunt of soaring US Treasury yields. Cloudflare sank by more than 10%, while hedge fund favorite Carvana tumbled over 12%. Tech heavyweights were also under pressure, with the NYSE FANG+ index down by more than 5%.
Tuesday’s inflation print may force the market to rethink the narrative surrounding a “soft landing,” with market pricing for Fed hikes shifting dramatically. Should the Fed’s terminal rate be higher than where it is currently priced, high-multiple stocks may remain vulnerable. It would appear that the market had gotten ahead of itself over the last week in pricing in “peak inflation,” and more pain could be ahead.
US Economic Calendar
Courtesy of the DailyFX Economic Calendar
Nasdaq 100 futures (NQ) fell sharply at 8:30 upon the release of the CPI numbers, ultimately tumbling more than 4%. Following a roll of futures contracts last week, NQ had continued its impressive rally ahead of this morning’s much anticipated release. Those gains stalled this morning just below resistance at 12942, as price shortly fell 600 points and filled the gap from September 8th. This morning’s print comes as a wake-up call to markets, who may have gotten complacent in terms of the fight against inflation. Markets have been determined to price in a “Fed pivot” of late, which may explain last week’s ascent. If weakness continues through to the closing bell, NQ may gravitate toward support around 12129.
Nasdaq 100 Futures (NQ) 1 Hour Chart
Chart created with TradingView
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--- Written by Brendan Fagan
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