Nasdaq 100: Assessing the Sustainability of the Recent Recovery

The Nasdaq 100 index, a bellwether for U.S. growth stocks, has navigated a volatile 2025 amid shifting macroeconomic dynamics and evolving technical signals. As the index closed at 25,310.28 on November 28, 2025, its year-to-date return of 4.33% reflects a fragile balance between optimism over AI-driven productivity gains and persistent macroeconomic headwinds. This analysis examines the sustainability of the Nasdaq 100's recent recovery through three lenses: macroeconomic risks, technical indicators, and the growing influence of AI-driven momentum strategies.

Macroeconomic Risks: A Delicate Tightrope

The Nasdaq 100's performance remains inextricably tied to global macroeconomic conditions. While inflation is projected to ease to 5.33% in 2025 from 5.78% in 2024, regional disparities persist. The Americas, for instance, face a slight uptick to 4.43% according to reports, complicating the Federal Reserve's path to normalization. Market expectations for a Fed rate cut at the December 9–10 FOMC meeting have surged to 81%, up from 30% just a week prior, driven by weak U.S. economic data and dovish central bank rhetoric. However, this optimism is tempered by broader risks.

Global trade tensions, particularly the Trump administration's protectionist tariffs, have introduced stagflationary pressures, dampening growth in emerging markets and straining corporate profit margins according to JPMorgan research. The global economy is forecast to expand at 2.62% in 2025 according to the latest outlook, but this slowdown-coupled with reduced immigration and tariff shocks-threatens to erode the U.S. economy's historical "exceptionalism." For the Nasdaq 100, which is heavily weighted toward tech and innovation sectors, these risks could amplify earnings volatility, especially if global demand for AI-driven solutions softens.

Technical Indicators: A Mixed Signal

Technically, the Nasdaq 100 remains above its 50-, 100-, and 200-day moving averages, forming an upward channel since May 2025. This suggests a medium-term bullish trend, bolstered by AI-related productivity gains. However, near-term caution is warranted. The Relative Strength Index (RSI) has oscillated between overbought and oversold levels, with conflicting signals emerging from different analyses. While one report notes the RSI approaching overbought territory, another highlights it dipping to 37, nearing oversold conditions. This volatility underscores a market in consolidation, with bearish divergence in the MACD-a key indicator of momentum-further signaling potential retracement.

The MACD's bearish divergence, where price highs outpace momentum, is a classic precursor to corrections. Additionally, the index's prolonged period above key moving averages has stretched market breadth, increasing the likelihood of a pullback. These technical signals suggest that while the Nasdaq 100's long-term trajectory remains intact, short-term corrections are probable if key resistance levels are breached.

AI-Driven Momentum: Promise and Peril

AI models have emerged as both a catalyst and a cautionary tale for the Nasdaq 100. On one hand, AI-driven productivity gains have fueled optimism for growth stocks, particularly in AI-capex spending. On the other, technical analyses powered by AI reveal concerning trends. For instance, bearish divergences in the RSI for both the S&P 500 and Nasdaq 100 indicate weakening bullish momentum. The MACD, while still broadly bullish, shows signs of deceleration, hinting at a market that may be running out of steam.

AI's predictive power is not without its limitations. While one methodology achieved a cumulative return of 1978%, through monthly rebalancing, such results depend heavily on tailored frameworks and data inputs. As noted in a recent study, AI models must be calibrated to specific investment horizons and market conditions to avoid overfitting. This duality-AI as both a tool and a potential overreliance-highlights the need for disciplined risk management in Nasdaq 100 strategies.

Conclusion: A Fragile Equilibrium

The Nasdaq 100's recent recovery rests on a precarious equilibrium. Macroeconomic risks, including inflationary pressures and global trade tensions, threaten to disrupt the Fed's rate-cut narrative. Technically, the index faces a crossroads: its bullish trend remains intact, but bearish divergences and overbought conditions suggest a near-term correction is likely. Meanwhile, AI-driven momentum offers both promise and peril, with predictive models capable of enhancing returns but requiring careful calibration.

For investors, the path forward demands a balanced approach. While the Nasdaq 100's long-term fundamentals-anchored in AI innovation-remain compelling, near-term volatility is inevitable. Positioning for both growth and risk mitigation-through hedging or sector rotation-may be the key to navigating this complex landscape.