Where we are: Nasdaq futures are trading at 30307.25, up 0.83% on the session and near the overnight high of 30370.75. This extends yesterday’s rally, which saw the Nasdaq Composite hit a record closing high. The index is looking to open well above the prior New York close, boosted by overnight strength.
What’s driving it: The relentless bid in AI-related stocks continues to be the primary driver, with Micron’s surge adding fuel to the fire. While the Fed minutes from April’s discount rate meeting are unlikely to contain fresh insights, the underlying narrative of resilient growth and the market’s interpretation of a dovish Fed underpin the risk-on sentiment. The slight easing in Treasury yields, with the 10-year down to 4.468%, is providing further support.
- Hedge funds are reportedly “doubling down” on AI stocks, according to Goldman Sachs, reinforcing the momentum trade.
- Micron is leading the charge, with analyst upgrades and a 19.3% surge yesterday propelling it towards a $1 trillion market cap.
- Speculator positioning in Nasdaq 100 futures remains crowded short at the 4th percentile, raising squeeze risk should the rally persist.
NY session focus: Focus will be on whether the early momentum can be sustained, especially as the S&P 500 and Nasdaq also trade at record highs. Keep an eye on the 10-year yield; a break below 4.40% could accelerate the rally. Key levels to watch are 30,500 on the upside and 30,000 as initial support. The working trade remains long AI-linked semis, but Salesforce earnings after the bell could introduce some volatility. The pain trade here is a sharp rotation out of tech into value, triggered by an unexpected hawkish shift in Fed rhetoric.