Nasdaq showed the best dynamics in January since 2001

By the end of January, the NASDAQ Composite stock index, consisting of shares of high-tech companies, increased by 11%, which was the best dynamics for this period since 2001. 

In January 2001, at the peak of the high-tech boom of the late 1990s and early 2000s, the Nasdaq rose by 12.2%.

Analysts identify several reasons for such positive dynamics. Firstly, it is a slowdown in inflation. Secondly, forecasts of a smaller-than-expected recession in the United States. In addition, the index was supported by expectations that the US Federal Reserve will begin to reduce the rate of increase in interest rates, which will be another sign of economic recovery.

Melissa Brown, Managing Director of the analytical company Qontigo, noted that expectations for Fed rates have become one of the main driving forces of positive dynamics in the market. And if the Fed makes it clear that they are not going to reduce the pace of rate hikes, this will be a strong negative factor for the market. But if the Fed confirms investors' expectations, it is unlikely that this will have a strong impact on the dynamics, since such expectations have already been played back.

Expectations for Fed rates also caused the positive dynamics of the S&P 500 index, which consists of 500 shares of public companies with the largest capitalization. In January, this index showed the best dynamics since 2019.