Tech Stocks Surge to New Heights Amid Inflation Data Boost

The technology-heavy Nasdaq 100 index continues its relentless upward trajectory, achieving another record close on Friday following a powerful rally. This latest surge extends the index's record-breaking performance, fueled by unexpectedly moderate inflation figures that have revitalized hopes for impending interest rate reductions. However, beneath the surface of Wall Street's exuberance, technical indicators are flashing potential warning signs of an overheating market.

September's consumer price data, released later than scheduled, provided the crucial catalyst for market optimism. With annual inflation registering at 3.0%—slightly below the anticipated 3.1%—investors grew increasingly confident that the Federal Reserve would implement rate cuts in the near future.

Market response was immediate and vigorous. The Nasdaq 100 jumped more than one percent, briefly touching a historic peak of 25,440 points. The rally demonstrated remarkable breadth across the technology sector, with virtually all major constituents participating in the advance. Alphabet led the charge with a 2.67% gain, while semiconductor giant Nvidia advanced 2.25% and artificial intelligence specialist Palantir climbed 2.30%.

Technical Warnings Emerge Despite Bullish Sentiment

While market sentiment remains overwhelmingly positive, several technical indicators suggest potential turbulence ahead. The 14-day Relative Strength Index (RSI) reached 69.1, approaching the psychologically significant 70 threshold traditionally viewed as overbought territory.

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

Even more concerning to technical analysts are the Stochastic and Williams %R oscillators, both of which have already entered overbought zones. These patterns typically precede either market consolidation or a potential pullback, raising questions about how much longer the current rally can sustain its momentum without a pause.

Semiconductor Sector Powers Advance

Chip manufacturers once again demonstrated their role as market drivers, with positive earnings from Intel creating ripple effects throughout the industry. Chip designer Arm Holdings gained 2.45%, while Cadence Design Systems advanced 2.32% in a broad semiconductor upswing.

Market volatility indicators reinforced the optimistic mood, with the VIX index—often called the market's "fear gauge"—declining 1.56% to settle at 17.03 points. This movement signals sustained investor appetite for risk despite the extended market valuations.

With probability models indicating nearly 100% certainty of rate reductions at the upcoming Federal Reserve meeting, conditions appear favorable for continued gains. The immediate question facing traders is whether the index will breach the next psychological barrier at 25,500 points or instead enter a consolidation phase when trading resumes on Monday.