Nasdaq 100 Analysis: Price Maintains a Neutral Bias After the NFP Release

The day of the NFP has arrived, and following the release of employment data, the Nasdaq 100 index has recorded a variation of over 1%. However, the market continues to show a neutral tone, with the index trading below its historical highs around the 22,000 points zone. Additionally, the release of earnings reports from key companies within the index has slowed the bullish momentum that prevailed at the beginning of the trading week.

Employment Data Released

The U.S. employment data has finally been published. The NFP (Non-Farm Payrolls) reported 143,000 new jobs in January, below the expected 170,000, while the official unemployment rate stood at 4%, better than the 4.1% forecasted. The combination of these results generated a neutral bias in the Nasdaq 100 market, as the mixed figures do not provide a clear indication of whether U.S. employment will benefit the index in the short term.

Given this, it is important to consider the direction the Federal Reserve will take after assessing employment trends from the first month of the year. For now, the CME Group probability chart indicates a 91.5% likelihood that interest rates will remain in the 4.25%-4.5% range for the decision on March 19, reflecting the neutral stance the central bank has maintained in recent months by avoiding rate cuts.

Source: CME Group

For now, the mixed data between the NFP and the unemployment rate suggests that there are still positive factors in U.S. job creation, which could increase inflationary pressures monitored by the Federal Reserve. This, in turn, reinforces the likelihood that the central bank will pause rate cuts, at least in its next meeting.

Current interest rates at 4.5% continue to be an obstacle for the performance of U.S. stock indices, as they restrict credit access and, consequently, impact domestic consumption. As long as interest rates remain high, a prolonged bearish bias could become more relevant in the movements of the Nasdaq 100.

How Have Companies Performed?

This week, key earnings reports have also been released from major companies within the U.S. index, such as Alphabet and Amazon, which hold the 4th, 9th, and 10th positions in the Nasdaq 100, accounting for more than 10% of the index’s total weight.

Source: SlickCharts

• Alphabet (Google): The company released its quarterly earnings on February 4. Although revenue reached $96.47 billion, close to the expected $96.56 billion, and earnings per share stood at $2.15, slightly above the $2.13 forecast, the disappointment came from slower growth in its cloud services segment. Google reported a 30% growth in this sector, below the 35% recorded previously. This led to lower expectations regarding the company’s future performance in cloud services, triggering a bearish bias in the market.

   

• Amazon: For Amazon, earnings per share were $1.86, surpassing the expected $1.49, while revenue reached $187.79 billion, slightly above the $187.30 billion projected. However, the company disappointed investors with a forecast of just 5% sales growth for the first quarter and warned of a negative impact from exchange rates, which could exceed $2 billion. This has led to strong bearish pressure on the stock in recent trading hours.

As a result, over the last four sessions, Amazon has fallen more than 4%, bringing its price down to around $230, while Alphabet has dropped over 8%, settling at $190 per share.

Source: StoneX, Tradingview

The bearish bias in both stocks has played a key role in the Nasdaq 100 maintaining a neutral stance, given their significant weight in the index. If this trend of low expectations continues, both for Alphabet, Amazon, and other companies yet to report earnings, bearish pressure on the Nasdaq could intensify in the coming sessions.

Nasdaq 100 Technical Outlook

Source: StoneX, Tradingview

• Strong Uptrend: The index has been in a strong uptrend since August 2024, reaching historical highs above 22,000 points in recent months. However, the lack of new highs on the chart suggests that a neutral phase has taken over in the short term, which could lead to a sideways trend if the price fails to break above its historical resistance.

   

• RSI: The RSI indicator has started to lose its upward slope in recent sessions, approaching the neutral 50 level. This indicates that bullish momentum has weakened and that the market is reaching a balance, reinforcing the current neutral outlook. If the RSI remains near 50, the price may face resistance to continuing its previous uptrend.

   

  Key Levels:

   

• 22,000 points: The most important resistance level on the chart, corresponding to historical highs. A breakout above this level would reinforce the bullish outlook and could reignite the long-term uptrend.

   

• 21,300 points: A key support level that aligns with recent consolidation zones, the 50-period moving average, the Ichimoku cloud, and the current uptrend line. A breakdown below this level would put the remaining bullish bias at risk and could trigger a more significant downward move.

   

• 20,900 points: A distant support level, representing the lowest price levels reached over the past two months. Sustained bearish movements near this level could strengthen the case for a long-term downtrend.

Written by Julian Pineda, CFA – Market Analyst