Nasdaq 100 Outlook: The Index Holds Near Record Highs Ahead of the Fed Minutes

The Nasdaq 100 index continues to trade near record highs, posting an average gain of 1.2% over the past five trading sessions, as buying momentum remains strong against short-term selling pressure. For now, market sentiment stays optimistic ahead of today’s release of the Federal Reserve (Fed) minutes. This event could confirm the continuation of rate cuts in upcoming meetings, which would likely support additional buying pressure on the index in the short term.

What to Expect from the Minutes?

Market consensus suggests that the Fed will reaffirm its rate-cutting stance for the remainder of 2025. However, investors will be paying close attention to any internal divisions among Fed members regarding the last rate decision on September 17. It will be crucial to see whether the inflation risk is gaining more weight in the discussion and whether this could influence the next two meetings of the year—determining if the Fed maintains a dovish tone, supportive of lower rates in the near term.

According to CME Group’s FedWatch tool, there is a 92.47% probability that the October 29 meeting will bring a 25-basis-point cut, bringing the policy rate down to 3.75%. Although this probability has slightly decreased compared to last week’s reading, it remains well above 90%, leaving little room for a shift in stance in the short term. What truly matters now is whether today’s minutes reinforce this high probability or begin to alter market expectations for the upcoming decision.

Source: CMEGROUP

In this context, if the minutes confirm expectations of lower rates, the outcome could have a positive impact on short-term confidence in the Nasdaq. Lower interest rates generally reduce borrowing costs and stimulate consumption, supporting the performance of the tech-heavy index, especially heading into the year-end season. This could sustain strong equity demand, helping to preserve bullish pressure. However, much will depend on whether the minutes maintain a monetary easing tone consistent with the Fed’s recent stance.

 

Does the Government Shutdown Matter?

Although short-term confidence in the Nasdaq remains solid as investors await Fed commentary, the ongoing U.S. government shutdown remains a potential risk factor. The Senate continues to work toward approving the funding needed to restore full government operations.

For now, markets remain optimistic that the shutdown will be resolved soon. However, if the political gridlock persists, uncertainty could increase, weighing on companies with government-related contracts and limiting the Nasdaq’s longer-term growth momentum.

If political uncertainty continues, risk appetite could weaken, prompting capital flows toward safer assets. In such a scenario, the Nasdaq—considered a risk asset—could lose traction and investor confidence in its growth outlook.

This sentiment is reflected in the latest AAII investor sentiment survey, where 42.9% of respondents remain bullish on the market for the next six months, 17.9% are neutral, and 39.2% are bearish. The more cautious segment attributes its concern to the prolonged government shutdown and the possibility that the market is becoming overvalued near its recent highs.

Source: AAII

In summary, while short-term confidence appears largely unaffected by recent political developments, a prolonged government shutdown could eventually weaken long-term sentiment and trigger renewed selling pressure on the Nasdaq.

 

Technical Outlook for the Nasdaq 100

Source: StoneX, Tradingview

• Uptrend Remains Intact: The recent bullish momentum has reinforced a long-term upward trendline, which so far shows no signs of breaking. However, buying momentum appears to be fading as prices hold near record highs. If this exhaustion persists, it could pave the way for short-term pullbacks.

 

• RSI: The RSI indicator remains close to the 70 level, signaling overbought conditions. Additionally, the formation of lower highs in the RSI versus higher highs in price has created a bearish divergence, suggesting a potential imbalance following the strong bullish momentum of recent months. This may open space for deeper corrections in the near term.

 

• MACD: The MACD is hovering near the zero line, indicating weak directional strength in short-term moving averages. As long as this pattern persists, neutrality may dominate the chart.

 

Key Levels:

• 25,500 – Major Resistance: A key psychological and technical level in the absence of historical references. A sustained breakout above this area could confirm a more aggressive bullish phase and strengthen the dominant buying bias in the coming weeks.

 

• 24,400 – Near-Term Support: A recent neutral zone where continuous pullbacks have occurred. This level could act as a tentative barrier against further short-term declines.

 

• 23,900 – Key Support: Aligned with the 50-period simple moving average, this level represents the most important support for the Nasdaq. A break below it would endanger the current uptrend and could lead to a more consistent bearish bias in the weeks ahead.

 

Written by Julian Pineda, CFA – Market Analyst

Follow him on: @julianpineda25