- The Nasdaq 100 Index has jumped to a record high this year.
- Top companies like Applied Materials and Cisco will publish their earnings this week.
- Donald Trump will visit China this week, while the US will release its inflation report.
The Nasdaq 100 Index surged to a record high of $29,235 on Friday, and this trend may continue this week. It has soared by 15% this year and 45% in the last 12 months. This surge has boosted the top ETFs tracking the index, including popular ones like QQQ, QQQM, and JEPQ. Here are the top catalysts to watch this week.
Nasdaq 100 Index to React to Key Corporate Earnings
The tech-heavy Nasdaq 100 Index will react to several earnings from large companies. The most notable ones will be firms like Cisco, Applied Materials, Nu Holding, Nebius, and Sea Limited.
While this week’s earnings will be important, investors are focusing on those due next week. NVIDIA, the world’s largest company, will publish its numbers next Wednesday. The other top companies to watch will be Walmart, Home Depot, Deere, and Analog Devices.
Analysts believe these companies will report strong numbers, as others have. FactSet data shows that average earnings growth in the first quarter is 27.7%, more than double analysts’ expectations.
The strong earnings growth has been driven by companies in the technology sector, such as Microsoft, Google, Amazon, and Meta Platforms. These companies have committed to boosting their capital spending to over $725 billion this year.
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Donald Trump’s Visit to China
The other top catalyst for the Nasdaq 100 Index and similar ETFs like QQQ, JEPQ, and QQQM is Trump’s upcoming trip to China. This is a key trip because of the size of the two economies and the potential deals to be announced.
For example, there is a likelihood that the two sides will approve semiconductor sales to China. Such a move would benefit companies like NVIDIA, Intel, and Advanced Micro Devices (AMD).
Patching up relations between the US and China would be good for the stock market. For one, it would ensure that China would not block shipments of rare earth materials to the United States.
US Consumer Inflation Data
The main macro data to watch this week will be the upcoming US consumer inflation report on Tuesday. Economists expect the upcoming data to show that the headline Consumer Price Index (CPI) jumped from 3.3% in March to 3.6% in April this year. Gasoline prices have jumped from below $2 earlier this year to $4.5 today.
A stronger inflation report, following the US’s encouraging jobs numbers, will signal a more hawkish Federal Reserve. In this case, the Federal Reserve may not cut interest rates anytime soon, with Goldman Sachs predicting a December hike. JPMorgan, on the other hand, expects the bank to hike rates in the third quarter of next year.
Historically, the Nasdaq 100 Index pulls back in terms when the Fed is hiking interest rates, as we saw in 2022. However, the bank has largely ignored the macro data recently.
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US and Iran War Progress
The Nasdaq 100 Index and its top ETFs, such as QQQ, QQQM, and JEPQ, will also react to the new developments in the US-Iran war. Iran sent its response to the US proposals on Sunday. According to Axios, Trump said that he rejected Iran’s response to the US offer.
These actions mean that the US and Iran may restart the war in the near term. Trump is said to be considering a short kinetic attack to force the Iranians into a deal.
Restarting the war would trigger a Nasdaq 100 Index pullback, as it has become highly overbought. The Relative Strength Index has jumped to 82, its highest point since June 2024. The last time this happened, the index dropped from $20,735 to $17,445 within weeks.
