Where we are: Nasdaq futures are currently trading at 29271.00, down 0.12% on the day, trading within a relatively narrow range of 29227.50 to 29399.25. This is just shy of Friday’s cash close of 26247.08, highlighting the persistent premium in futures. Despite the minor pullback, the index remains near record highs reached last session, with bulls eyeing 30,000 if the AI rally resumes its earlier momentum.
What’s driving it: A mixed picture is developing, with rising real yields acting as a headwind to tech valuations even as optimism around AI investment persists. US 10-year real yields have climbed to 1.96%, a 2bp rise on Friday. This increase, reflecting expectations of sustained economic growth and tighter monetary policy, puts pressure on high-growth tech stocks. The impact is somewhat offset by the continued focus on AI plays, as demonstrated by Pictet Fund’s allocation of 30% of its cash into AI stocks, and a solid tech earnings season, highlighted by Dan Ives predicting Nasdaq 30,000 as AI rally expands.
- US 10Y real yields at 1.96% offer less support to high-multiple tech names
- Pictet Fund’s 30% allocation to AI stocks signals continued conviction
- Net non-commercial positioning remains modestly long, but only at the 2th percentile of the 52-week range, leaving room for more accumulation on dips.
NY session focus: Traders will be closely watching the response to any further weakness in AI Hyperscalers and chip producers, after pre-market softness on Monday. Focus will remain on bond yields, especially real rates, to see if the current upward trend continues. A break below 29227.50 in the futures could trigger a test of lower levels. On the upside, a push above 29400 targets a run at 29500. The main event today will be navigating any risk-off headlines regarding energy price spikes or comments on the Iran situation. The pain trade remains a deeper correction in high-multiple tech, particularly if real yields continue to rise.