Nasdaq 100: Valuation Pressures Mount as Fed Minutes Shake Stock Market Sentiment

Wall Street Rally Stalls as Valuation Concerns Cool Momentum

U.S. stocks paused their rally on Thursday, weighed down by concerns over stretched valuations and fading optimism for aggressive Federal Reserve rate cuts. With limited fresh catalysts, traders reassessed equity risks following weeks of bullish momentum driven by artificial intelligence enthusiasm and hopes for looser monetary policy.

Fed meeting minutes released Wednesday revealed that policymakers remain cautious about inflation, tempering expectations for swift easing. While New York Fed President John Williams voiced support for more rate cuts this year, the market remains sensitive to any hawkish commentary from other central bank officials, including upcoming remarks from Governor Michael Barr and San Francisco Fed President Mary Daly.

Are High Valuations at Risk Without More Fed Support?

The market’s resilience through seasonal weakness is being tested as rate cut bets come under pressure. At 16:30 GMT, the Dow Jones dropped 254,32 points or 0.55% to 46,347.46, the S&P 500 slid 32.71 points or 0.48% to 6,721.01, and the Nasdaq fell 110.583 points or 0.51% to 22,932.794. The pullback follows a sharp multi-week rally that pushed indexes into overbought territory, raising the risk of a technical correction.

Rate-sensitive consumer discretionary stocks led losses. Tesla slid 1.9% after U.S. regulators launched a probe into nearly 3 million vehicles with its Full Self-Driving system. Amazon fell 0.5%, dragging the sector down 0.9%. Tech majors were mostly flat, with Apple, Microsoft, and AppLovin all under pressure, contributing to Nasdaq’s weakness.

Which Sectors Struggled—and Which Stocks Bucked the Trend?

Industrials were another weak spot, with Boeing down 3.2% and Honeywell off 2.1%. The sector lost 0.9% overall, reflecting concerns about cyclical demand. Homebuilders also declined sharply as rising rates dampen housing demand—Pultegroup and D.R. Horton sank 5.2% and 4.5%, respectively.

Still, not all was negative. Delta Air Lines jumped 5.1% after issuing an upbeat Q4 outlook, while PepsiCo added 2.2% on strong Q3 results. Albemarle surged 7.2% after a bullish analyst call and news of China tightening controls on rare earth exports.

Is the Bull Market Still Intact Despite Near-Term Pressure?

While short-term risks are building, several analysts remain constructive on the broader trend. Investor interest in quality tech and easing geopolitical tensions—highlighted by progress on an Israel-Hamas truce—offer some tailwinds.

Technically, the E-mini Nasdaq-100 Futures signal a potential reversal top, which could prompt a 2–3 day pullback. However, unless confirmed with further downside, the broader trend remains intact.

Traders will be closely watching for Friday’s Fed speakers and any geopolitical headlines to assess the next directional cue. With positioning still bullish, the market remains vulnerable to rate surprises or unexpected macro headlines.

More Information in our Economic Calendar.