Nasdaq Breaks 20,000 Barrier as Tech Titans Soar; Traders Eye Fed Rate Shift

On Wednesday, the Nasdaq Composite Index made history by surpassing the 20,000 mark for the first time, driven largely by a rally in technology stocks. This milestone was achieved as the index, at press time, climbed over 1.7% to 20,031 points. The Nasdaq’s performance is up over 4% for the month and has surged more than 33% over the entire year. In comparison, the S&P 500 index rose by 0.87%, while the Dow Jones Industrial Average saw a modest increase of 0.02% for the year, marking gains of 27% and 17%, respectively.

This remarkable ascent of the Nasdaq was powered significantly by gains in heavyweight tech stocks, which account for a substantial proportion of the index's movement. The SPDR Technology Select Sector ETF (XLK) reflected this trend with a rise exceeding 1.5%. Among the so-called "magnificent seven" companies, tech giants like Apple, Amazon, Google, Meta, and Tesla each recorded intraday all-time highs. Notably, Google led the pack with the largest surge, buoyed by recent announcements of a groundbreaking quantum computing chip.

Broadcom, a major constituent of the Nasdaq, experienced a notable uptick of 5.2%. Industry reports suggest that Apple Inc. is actively developing a server chip optimized for artificial intelligence (AI) and is collaborating with Broadcom to advance the chip's network technology.

On the macroeconomic front, earlier data from the U.S. Labor Department indicated that November's inflation figures were in line with market expectations, prompting traders to increase their bets on an imminent rate cut by the Federal Reserve. Tom Hainlin, a senior investment strategist at U.S. Bank Asset Management, posits that there are few elements deterring continued market strength into year-end.

Meanwhile, the broader market rally was underpinned by an uptick in small business sentiment, as reported by the National Federation of Independent Business (NFIB), which reached its highest level since June 2021. This comes amid anticipations of favorable policy shifts with the incoming presidential administration.

These developments reflect a robust sentiment across the market, as investors digest both the index's new high and economic indicators that could steer forthcoming monetary policy. Traders remain focused on potential shifts expected at the Federal Reserve's policy meeting next week, as market consensus heightens regarding a notable shift in interest rates.