Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

​Tech stocks hope for good earnings to power Nasdaq 100 higher

​​Tech stocks have struggled since mid-July, but earnings season may deliver a reason for the sector and the Nasdaq 100 to embark on a Q4 rally.

Nasdaq Source: Bloomberg

​​​Tech stocks struggle as yields rise

​Big tech stocks, including Apple, Microsoft, Amazon.com, Alphabet, Nvidia, Tesla, and Meta, have experienced a 7% drop over the past two months, compared to a 3% decline in the broader S&P 500. This decline can be attributed to the rise in Treasury yields, which have reached 16-year highs, causing investors to reevaluate their positions.

​Big tech names see valuations fall

​As a result of these declines, mega-cap forward price-to-earnings (P/E) ratios have fallen by 20% over the past two months, leading to their cheapest levels in six years. This has created a significant discount compared to the market based on long-term growth, a situation not seen since January 2017. However, despite these valuation declines, Goldman Sachs notes that the group is expected to post sales growth of 11% in the third quarter (Q3), far outpacing the 1% improvement expected for the S&P 500 as a whole.

​Sector’s strong historical record

​The sector has a strong record of outperformance when it comes to earnings. They have beaten consensus sales growth expectations 81% of the time and have outperformed in two-thirds of earnings seasons since the Q4 of 2016.

​Q4 seasonality effect remains strong

​Tech stocks have suffered sharp declines since August. The percentage of members of the Nasdaq 100 above their 50-day simple moving (SMA) average fell to 12% in early-October, its lowest reading in a year.

​Historically, this low breadth reading tends to be followed up by a surge in the stock prices of big-cap tech stocks, and in the price of the Nasdaq 100 itself. In addition, seasonality for the sector remains positive, with the final quarter of the year seeing a positive performance for tech stocks over the past 20 years.

​​Concerns about the global economy remain, but with interest rates in the US appearing to have plateaued, a brighter outlook for mega-cap tech names appears to have arrived.

​Nasdaq 100 technical analysis

​After a huge run higher in the first half of the year, which saw the index gain 43% by mid-July, we have seen the Nasdaq 100 drop back.

​​Trendline resistance from the July high has prevented any near-term breakout for the index, but the 14,500 level has been staunchly defended in August and September.

​A breakout above 15,370 would mark a more bullish view, and align with expectations of positive performance for the index as normally seen in the final quarter of 2023.

Nasdaq 100 chart Source: IG/ProRealTime
Nasdaq 100 chart Source: IG/ProRealTime

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing
Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.