Market Awaits Inflation Data as Nasdaq 100 Holds Steady

All eyes are fixed on the imminent release of December's inflation figures, creating a palpable tension across financial markets. The Nasdaq 100 index traded in a narrow range as investors held their positions ahead of the 14:30 CET data publication. The core question preoccupying traders is whether the Federal Reserve retains sufficient flexibility to implement interest rate cuts, or if pressure on technology stocks is set to intensify.

Compounding the uncertainty are reported tensions between the White House and Fed Chair Jerome Powell. An investigation by the Justice Department has introduced an additional layer of nervousness, despite markets demonstrating initial resilience at the start of the week.

In an interesting development, Walmart emerged as a stabilizing force. The retail giant, scheduled for inclusion in the Nasdaq 100 on January 20, saw its shares surge 3.0% on Monday to a record high of $117.97. This movement is largely attributed to passive index funds beginning to rebalance their holdings ahead of the official addition, creating mechanical buying pressure that buoyed the broader index.

Further fueling the rally was news of a new partnership with Google in the field of artificial intelligence, adding positive sentiment around the stock. Trading volume was notably high, coming in 143% above the three-month average, indicating early positioning by institutional investors.

Sector Rotation Evident in Tech

As Walmart gained, capital flowed into other segments of the market. Data storage companies Western Digital and Seagate Technology saw their shares advance 6.0% and 5.0% respectively on Monday. This strength reflects sustained demand for data storage infrastructure within the booming AI sector. Advanced Micro Devices (AMD) also posted a solid gain of 2.0%.

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

In a separate move, Palantir shares climbed 1.8% after Citigroup upgraded the stock to a "Buy" rating. The firm issued a price target of $235, citing an anticipated US government spending cycle on artificial intelligence systems as a key driver.

Warning Signals from Bonds and Gold

The prevailing market anxiety is mirrored in other asset classes. The yield on the benchmark 10-year US Treasury note climbed to 4.19%. This increase suggests investors are either pricing in the potential for higher interest rates or expressing doubts about the central bank's independence.

Simultaneously, gold prices hit a record high of $4,624 per ounce. Historically, strong demand for the precious metal signals institutional distrust towards prevailing political or economic conditions.

Technical Perspective for the Index

The Nasdaq 100 is currently consolidating within a tight trading band. Immediate resistance is positioned at 25,877 points, with the next key psychological level at 26,000. On the downside, the area around 25,646 points provides near-term support. A break below this zone would likely see the index test its 50-day moving average, currently at 25,442 points.

This consolidation near all-time highs typically resembles a continuation pattern. However, the subsequent directional move hinges almost entirely on the latest inflation readings. Market consensus anticipates the annual rate to have risen to 2.7%. A surprise to the upside could definitively dampen recent optimism surrounding potential rate cuts.