Nasdaq 100 coils above its averages as Fed turns hawkish
Published Mon, Sep 21, 2026 · 07:00 AM
WALL Street enters the new week digesting a hawkish turn from the Federal Reserve. On Sep 16, the Federal Open Market Committee raised its policy rate by a quarter point to 3.75 to 4 per cent, its first increase since 2023, in a unanimous vote. What mattered more than the move was the signal that tightening may not be done: Fed Chair Kevin Warsh reiterated that inflation has run too high for too long, and the updated projections pencil in at least one further hike before year-end. Core PCE inflation near 3.3 per cent, headline inflation nearer 3.7 per cent and oil above US$100 amid Middle East tensions explain the caution.
Markets recoiled at first, the S&P 500 closing lower on the day of the hike, a first for the opening of a tightening cycle since 1997. Sentiment flipped on Thursday, when Brent crude slid back towards US$102 and the 10-year Treasury yield eased to about 4.94 per cent; the Nasdaq 100 rallied 1.73 per cent to close at 29,446.98. The bounce shows risk appetite remains intact, though the tension is unresolved. Investors are weighing the near-term cost of higher rates against the prospect that firm action contains inflation, while resilient labour data, with weekly jobless claims at a six-week low of 196,000, keeps recession fears at bay.
The week ahead brings flash PMIs, the final second-quarter GDP reading and a fuller slate of Fed speakers now that the blackout has lifted, before the August PCE report, the Fed’s preferred inflation gauge, on Sep 30.
The technical setup
The primary uptrend remains intact. Price sits well above a rising 200-day simple moving average (SMA) at 27,208 and 250-day SMA at 26,770, a legacy of the advance from the April low. Since the June record near 30,700, the index has consolidated, tracing a series of lower highs (roughly 30,200 in August, close to 30,000 in early September) that describe a gently downward-sloping range rather than a fresh leg higher. More telling is the compression of the shorter averages: the 20-day (29,280), 100-day (29,231) and 50-day (29,177) SMAs are bunched within a 100-point band around 29,200. Last Thursday’s rally reclaimed that cluster, turning overhead resistance into the first line of support. Such tight coiling of the averages tends to precede a volatility expansion; the direction of the break is what counts.
Key levels ahead
On the upside, last Thursday’s high at 29,495 is the immediate hurdle, ahead of the 30,000 mark and the August peak near 30,200; a close above it would put the June record near 30,700 back in reach. On the downside, the moving-average cluster at 29,180-29,280 is the zone bulls must defend. A decisive break would expose the recent swing low near 28,900, then the 28,000 area, below which lies a considerable gap to the 200-day at 27,208 and a sterner trend test.
The balance of risks
The bull case rests on the rebound holding: softening oil, a firm labour market and an intact long-term trend. A benign PCE print on Sep 30 would bolster the view that the hawkish repricing is largely complete, favouring a push back towards the highs. The bear case is that the Fed means what it says, tightening monetary policy with another rate hike.
Combined with a 10-year Treasury yield near multi-decade highs and mortgage rates around 7.2 per cent, these conditions could weigh on technology leaders whose strong performance depends largely on investors being willing to pay stretched valuations. A hotter inflation print or fresh oil escalation could break the cluster and open a slide towards the 200-day.
The political calendar sharpens the risk. On Thursday (Sep 24), President Trump is scheduled to host Chinese President Xi Jinping in Washington, where trade, Taiwan, the Iran war and AI export controls top the agenda. A constructive tone, tariff relief or fresh purchase pledges would lift risk appetite and help the index press towards 30,000; a breakdown over Taiwan or export controls would weigh on the cluster below. The US midterm elections on Nov 3, with Congress finely balanced, keep event risk elevated beyond that.
For now, the Nasdaq 100 sits above its clustered averages, with the primary trend still upward but momentum flagging. The prudent course favours patience: await a clean break of either the 29,180 support band or 30,000 resistance before committing. Range-bound trading is the near-term base case, though with the summit, the PCE print and an election all inside six weeks, investors should brace themselves for wider swings.
