The Federal Reserve's December decision is imminent. How will the Nasdaq 100 move?

The Federal Reserve's December interest rate decision will be announced this Thursday (December 11), marking the last FOMC meeting of 2025. The market still holds expectations for a rate cut, with an approximately 87.2% probability of a 25 basis point cut, and there are also two more rate cut opportunities expected in 2026. However, as mentioned earlier, Powell has explicitly stated that a rate cut in December is not "set in stone," which adds a layer of uncertainty to the market.

More challenging is the ongoing 43-day government shutdown in the United States, which has prevented the collection of many key economic data. This means the Fed will have to make decisions with limited important references—October non-farm payroll data will be incorporated into the November report, and October CPI has not been released at all, with November CPI scheduled to be announced only on December 18. The vacuum of these two critical reports will inevitably intensify internal disagreements within the Federal Reserve.

Based on existing data, the US unemployment rate in September rose to 4.4%, and the September PCE price index increased by 2.8% year-on-year, roughly in line with expectations. US-China trade relations have eased, and the inflation upward risk may be a "one-time" phenomenon, providing some confidence for a rate cut. But what investors truly care about is the Fed's upcoming policy stance. Considering that monetary policy has about a six-month lag effect, and Powell will step down in May next year, the market speculates that the Fed may only cut 25 basis points in December, with no further moves in the first half of the year. If Powell emphasizes after the meeting that the threshold for future rate cuts will be higher, the "landing of the shoe" could trigger a sell-off in risk assets.

JPMorgan's strategic analysis team recently issued a warning, believing that the market has fully priced in the rate cut expectations, and the recent rally of the Nasdaq 100 may face profit-taking risks. Investors tend to lock in gains before the end of the year rather than further increasing positions. However, JPM still remains optimistic about the medium-term outlook, and the dovish stance of the Fed should support the stock market. Low oil prices, slowing wage growth, and easing tariffs are factors that favor the Fed's policy easing without fueling inflation.

The rise in US Treasury yields has become a new concern, putting pressure on tech stocks.

Notably, US Treasury yields have recently surged across the board. The 10-year Treasury yield rose by 5.6 basis points to 4.196%, and the 2-year yield, which is more sensitive to interest rates, increased by 4.4 basis points to 3.608%. This rise mainly stems from widening risk premiums—investors' concerns about US credit ratings, policy certainty, asset volatility, and the government's debt repayment capacity. On Monday, the VIX fear index surged by 8.25%, and the MOVE index increased by 7.46%, reflecting market nervousness.

The rising Treasury yields will directly constrain the upside potential of tech stocks, as higher interest rates reduce the relative attractiveness of high-growth stocks. Overall, the Nasdaq 100 index is currently in a sluggish upward phase, reflecting increased market divergence between bulls and bears. While the overall upward trend is unlikely to reverse in the short term, investors should remain alert to the risk of renewed selling pressure.

Technical: Lack of breakout momentum, risks emerging

From the daily chart of the Nasdaq 100, the index faces resistance above 26,000 points. If it cannot break through effectively, a double top pattern may form. A conservative estimate is that the index could retest below 24,000 points for support, with the key dividing line between bulls and bears at 25,200 points. Short-term investors should closely monitor these key levels to adjust their strategies accordingly.