Dear trader, dear stock market friends.
After the stock markets initially trended weakly at the start of the week and continued their corrections, a strong upward movement followed on Friday (August 22). This was triggered by Fed Chairman Jerome Powell's speech at the central bank conference in Jackson Hole, in which he held out the prospect of an easing of monetary policy. The Nasdaq 100 Index rose 1.5 percent on Friday, but ended the week down 0.9 percent
Powell opens the door for interest rate cuts
In his speech at the Jackson Hole conference, Powell cautiously signaled a possible easing of monetary policy. He held out the prospect that the "shift in the balance of risks" could justify an adjustment to the monetary policy course. The US Federal Reserve has so far left the key interest rate unchanged in the range of 4.25 %-4.50 % in the current year 2025. The markets reacted with corresponding relief to Powell's cautious about-turn: The prospect of interest rates falling soon set off a price surge and awakened new risk appetite on the stock markets.
Expectations of a rapid interest rate cut rose on the futures markets. According to the CME's FedWatch tool, the probability of an interest rate cut in September rose to 90% in the meantime.
Bond yields also fell noticeably: The yield on the 10-year US government bond fell by almost 9 basis points to around 4.24 % following Powell's comments, having been above 4.3 % at times earlier in the week as a result of hot inflation data.
Although Powell emphasized that core inflation remains above the 2% target due to tariff effects, the Fed also sees increasing downside risks for growth and the labour market.
Tech sector caught between inflation worries and AI hype
Prior to Powell's speech, the equity markets recently faced a slight headwind, at least in the short term. On the one hand, new inflation fears caused uncertainty: the US Department of Labor reported an increase in the Producer Price Index (PPI) of +0.9 % for July compared to the previous month, or +3.3 % year-on-year. On the other hand, valuations came into focus: following the sharp rise in the prices of many tech stocks, more and more voices warned of a possible overheating in the AI sector. Even OpenAI CEO Sam Altman spoke of signs of an "AI bubble", as some tiny start-ups were being financed at exorbitant valuations. The combination of inflation worries and valuation fears led to the Nasdaq 100 suffering its biggest setback since May by the middle of the week.
Big tech and small caps lead the recovery rally
Following Jerome Powell's Jackson Hole speech, there was a broad-based recovery rally on Friday, particularly in interest rate-sensitive growth stocks. The mega-cap techs, which had previously been weak, were largely able to make gains.
- Tesla shares rose around 6 %, topping the Magnificent 7 winners list on Friday.
- Alphabet and Amazon also gained around +3 %.
- Meta Platforms rose by around +2 %.
- Nvidia showed a performance of +1.7 %.
- Apple, on the other hand, "only" managed to gain 1.3 %.
- Microsoft also turned positive and gained 0.6 %.
However, the buying mood was not limited to the well-known tech heavyweights: Semiconductor stocks as a whole benefited significantly from the prospect of falling interest rates. The Philadelphia Semiconductor Index rose by +2.7 % on Friday. Intel in particular made the headlines here and its shares shot up by 5.5 %. The background to this was the news that the US government is acquiring a 10% stake in the chip company in order to strengthen the domestic semiconductor industry.
In addition to the tech sector, other interest rate-sensitive stocks also reacted positively, such as shares from the real estate and construction sectors as well as small caps. The small-cap index Russell 2000 rose by almost 4 % to its highest level of the year.
Chart technology: all-time high of 24,000 points in sight
The recent correction in the Nasdaq 100 has so far not damaged the overarching chart scenario. From a technical perspective, it was a healthy pullback after an overheated phase. The index last reached a new record high of just under 24,000 points on August 13 before profit-taking set in.
As a result, the Nasdaq 100 fell by around 4.2 % in five trading days to an interim low of around 22,970 points on August 20. The price range of 22,950-23,000 points proved to be an important support level: the 50-day line and a horizontal support level are located here.
On the upside, the focus is now shifting back to the all-time high. In the short term, the area around 23,400-23,600 points represents a technical resistance that needs to be overcome. If the Nasdaq 100 Index manages to break above 23,600 points, this would be considered a procyclical buy signal and clear the way for a renewed attack on the record level of around 24,000 points.
On the downside, the aforementioned support zone at 22,800 to 2300 points is important for the short-term trend. Should the Nasdaq 100 fall below this price zone, a more extensive correction would be imminent.
The next important long-term support level is around 22,000 points. This is where the old all-time highs and the 100-day line are located.
Author: Tobias Schmid
Date: 25.08.2025
