Insights 
VT 
The Nasdaq 100 has reached record highs, approaching 26,000, as markets anticipate a Federal Reserve rate cut. The CME FedWatch Tool indicates a 96.7% likelihood of a 25bps cut at the upcoming FOMC meeting, which would lower the rate from 4.25% to 4.00%.
As markets focus on Fed Chair Powell’s remarks, the Nasdaq’s rise reflects a strong, risk-on sentiment despite the U.S. government shutdown. The market overlooks fiscal challenges, concentrated on monetary policy, tech resilience, and liquidity conditions.
Impact Of Potential Rate Cut
A potential rate cut by the Fed, seen as almost certain, is propelling the Nasdaq by reducing borrowing costs and motivating capital reallocation into tech stocks. As liquidity expectations rise, valuations expand, driving significant market movements.
The government shutdown unexpectedly slowed Treasury issuance, reducing bond flows and easing pressure on yields. Along with delayed economic data, this supports risk assets like equities, particularly in tech and AI sectors.
As anticipated rate cuts are priced in, Powell’s tone will be the pivotal factor in market directions. A supportive tone could maintain the rally, while a cautious approach may trigger profit-taking. Upcoming GDP data could also influence market sentiment.
With the Nasdaq 100 pushing 26,000 after nine straight bullish days, we should be cautious about chasing new long positions right now. The market has already priced in the Federal Reserve’s rate cut on October 30, creating a classic “buy the rumor, sell the news” risk. The most prudent approach is to manage existing profitable positions and avoid adding new risk ahead of the Fed’s announcement.
Market Reactions And Strategies
The primary event is not the cut itself, but Federal Reserve Chair Powell’s tone, which will inject significant volatility. Implied volatility on Nasdaq options has surged ahead of the meeting, making outright long calls or puts expensive. A better strategy could be to use spreads to define risk or, for experienced traders, to consider selling premium to capitalize on the expected post-announcement volatility crush.
If Powell’s press conference is dovish and he signals more cuts are coming, we should use any intraday dip as a buying opportunity. This would reaffirm the market’s bull case and likely propel the index toward the 26,250 target. We saw a similar setup back in the summer of 2019, when the Fed’s first “pre-emptive” rate cut kicked off a powerful multi-month rally in tech stocks.
Conversely, if Powell frames this cut as a one-off “technical adjustment,” the market will see it as hawkish, triggering immediate profit-taking. In this scenario, short-term put options or shorting futures targeting the 25,700 support level would be the logical trade. This would be a tactical move, as the broader trend of monetary easing has just begun.
We must remember this rally has been heavily concentrated in a few mega-cap tech names, echoing the market structure we saw during the 2023-2024 AI boom. The Nasdaq 100 is already up over 35% year-to-date in 2025, with the top ten companies accounting for over half of that performance. This concentration makes the index vulnerable to sharp, fast pullbacks if sentiment shifts even slightly.
Even if we see a short-term sell-off on a hawkish tone, the bigger picture is that the Fed has started an easing cycle. Historically, the first rate cut provides a strong tailwind for growth assets for the following six to twelve months. Any significant weakness in the coming weeks should therefore be viewed as a structural buying opportunity for the longer-term move toward 2026.
