Alexandra PankratyevaGiven the acute impact of the Covid-19 pandemic on equity valuations so far in 2020, the NASDAQ 100 (NDX) shows relative strength compared to the broader US and global stock markets. The index enjoys highly favourable fundamentals, as its constituents are generally more mature and diversified companies from various sectors, including Apple (AAPL), Amazon (AMZN), Gilead Sciences (GILD) and Tesla (TSLA).
For the NASDAQ 100 index, 2019 became the culmination of a decade of extraordinary performance, driven by unprecedented innovation and growth of its constituent companies. Those who invested in the NASDAQ 100 in 2009, right after it started recovering from the worst recession caused by the Great Financial Crisis 2008, enjoyed superb revenues of 369 per cent on a price-return basis.
Will the NASDAQ 100 rally continue in 2020? As of May 20, 2020, the index is traded at 9,382 showing an almost 30 per cent recovery from its year low of 6,620 on March 22, 2020.
NASDAQ 100 news: momentum continues
The index has experienced an impressive resurgence from its March lows. With Netflix (NFLX) and Amazon (AMZN) contributing to the broader positive NASDAQ trend this year, investors are willing to trade the US tech index.
According to NASDAQ.com, the preeminent index for leading tech equities, the NDX has benefited from the interest among millennial investors for tech stocks as more traders shift away from traditional companies and sectors represented in the broader S&P 500 index.
In line with its latest NASDAQ 100 analysis, the index continues its rally, although it has not yet reached its resistance level of roughly 9,450. At this point it seems likely that the market will see a pullback, as it can’t go up forever. However, it is not an easy task to short the market, which is driven by Netflix (NFLX), Alphabet (GOOGL), Microsoft (MSFT), Facebook (FB), Amazon (AMZN) and other giants.
Disregarding the economic realities, the NASDAQ 100 performance is expected to go higher, because many companies that form the biggest part of the index are not suffering badly from the great lockdown and stay-at-home policies. These include Microsoft and its Office 360, Netflix and its streaming video service and Amazon with its global delivery service.
Nasdaq 100 vs S&P 500: when performance matters
The NASDAQ 100 (NDX) and the S&P 500 have always been the two most popular stock market indices in the US. Analysing the performance of both indices in 2020, we may see that the NASDAQ 100 outperforms its peer by a wide margin.
One of the reasons for the NASDAQ 100 superiority is its allocation towards the top performing sectors, such as technology, healthcare and consumer services.
Fuelled by strength in technology stocks, the NASDAQ 100 is higher by 6.54 per cent year to date, while the S&P 500 continues fluctuating in negative territory: down 9.53 per cent YTD.
NASDAQ 100 outlook: major market movers
Several important bits of US tech 100 news have driven the index price during the Covid-19 pandemic. The great lockdown has forced people to stay at home and boosted the popularity of e-commerce businesses, such as Amazon (AMZN). Reportedly, the business earns more than $11,000 (£9,000, €10,000) every second, as more people shop online these days.
According to its latest Q1 2020 earnings report, Amazon showed revenue of $75.5bn, net income of $2.5bn and $5.01 earnings per share.
The AMZN shares are now traded at its year high of $2,483, which represent 34.39 per cent growth year to date.
In line with e-commerce businesses, robust performance is seen in the software as a service (SaaS) sector. Some key beneficiaries during the lockdown and work-from-home regime are Microsoft (MSFT), Adobe (ADBE) and Alphabet (GOOGL). Another sector, which has gained popularity during the pandemic is video gaming. Some of the major game-related businesses include Electronic Arts (EA), Nvidia (NVDA) and Advanced Micro Devices (AMD).
Commenting on Microsoft’s first quarter earnings results, CEO Satya Nadella said: “The world’s leading companies are choosing our cloud to build their digital capability. We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”
Microsoft shared a strong start of the year with $33.1bn revenue (14 per cent increase) and operating income of $12.7bn (27 per cent increase). As of May 20, 2020, MSFT is traded at $184.64, which is very close to its 52-week high of $190.70.
However, NASDAQ 100 also includes companies, which have been seriously hit by the coronavirus, including travel-related businesses like TripAdvisor (TRIP) and Expedia (EXPE) and airline stocks like American Airlines (AAL). As the lockdowns continue around the world, these stocks’ performance remains under pressure.
Bottom line: positive momentum dominates NASDAQ latest news
Referring to the latest NASDAQ 100 market sentiment, the US tech index is rated as a strong BUY. Although it was a mixed earnings season, due to the unprecedented impact of coronavirus on corporate earnings, many NASDAQ 100 constituents, including Microsoft, Facebook, Amazon, Tesla and Alphabet showed strong first-quarter results.
If their performance continues going up further in 2020, the NASDAQ 100 forecast will likely follow. The top-traded NASDAQ 100 index stocks this week include the following global brands:
You can always trade the NASDAQ 100 index with CFDs, speculating on its price movements. Open a long position, if you believe the index will break its major resistance and move forward to 10,000 level, or go short, if you predict the downward reversal.
Follow the NASDAQ 100 news at Capital.com and spot the best opportunities to trade the US tech 100 index with CFDs.
You can learn more about CFD trading with free online courses and find out how to trade NASDAQ 100 by reading our comprehensive guide.
