Investing

Nasdaq Composite Drops Ahead of Important Nasdaq-100 Decision Tomorrow

Eric Bleeker

Published: December 12, 2024 1:07 pm

Last Updated: December 12, 2024 2:25 pm

Live Updates

Losses Accelerate

2:23 pm

As of 2:20 p.m. ET, the Nasdaq-100 is now down .50% while the Russell 2000 has decline .86%.

One bright spot in the market is a successful IPO in a year that has seen few companies go public. ServiceTitan debuted today and its shares are trading significantly over their IPO price. After selling shares for $71, they’re trading for around $100 in late trading.

We also just published a larger report looking at whether companies like Palantir, MicroStrategy, and Axon will join the Nasdaq-100 tomorrow.

Adobe Falls After Earnings

1:00 pm

The most significant earnings report last night came from Adobe (Nasdaq: ADBE). While the company beat revenue and EPS estimates for last quarter, their guidance disappointed.

Adobe forecasts revenue of $5.65 billion in the first quarter of fiscal 2025, below estimates of $5.72 billion. More importantly, the company’s full-year guide for profits and revenues came in below expectations. Adobe is forecasting just 9% revenue growth for next year, a deceleration from recent results.

Shares are down 13% today.

As of 12:25 p.m. ET markets are generally down today. Here’s a look at where major indexes stand in the middle of the trading day:

• Nasdaq-100: Down 52.76 (-.26%)
• Dow Jones Industrial Average: Down 61.15 (-.14%)
• S&P 500: Down 10.81 (-.18%)
• Russell 2000: Down 17.11 (-.71%)

There’s major economic news with a fresh inflation report and big changes might be coming to the Nasdaq-100 tomorrow. Let’s dive into the market’s biggest news today.

Semiconductors Fall Again

Semiconductors have been under pressure this week and today is no exception. NVIDIA (Nasdaq: NVDA) is down 1.6%, Broadcom (Nasdaq: AVGO) is down 2.3%, while Micron (Nasdq: MU)has plunged 3.9%.

Companies continue to be under geopolitical pressure. NVIDIA is being investigated for monopolistic violations in China, which is seen as retaliation for U.S. export controls.

Wholesale Inflation Running Hot

The Bureau of Labor Statistics released November CPI data yesterday, which the market largely shrugged off. However, the producer price index was announced today and its inflation reading ran ‘hotter.’ Estimates for wholesale inflation were .2%, but November readings for the producer price index rose .4%.

A reading that far above estimates is going to raise concerns. One mitigating factor is that excluding food and energy, core PPI rose .2%, which was inline with forecasts. Higher inflation readings could lead to the Fed pumping the breaks on cutting rates, which would be a headwind for stocks n 2025.

Nasdaq-100 Expected to Announce Major Changes Tomorrow

While the Nasdaq Composite tracks a large number of stocks trading on the Nasdaq exchange, the Nasdaq-100 is a more selective index and includes just 100 of the largest Nasdaq companies.

Inclusion in the Nasdaq-100 is important because ETFs tracking it have seen significant inflows in recent years. The most important of these is the Invesco QQQ Trust (Nasdaq: QQQ), which reports $329 billion in assets under management alone.

Tomorrow the Nasdaq is expected to announce a rebalancing that will see several new stocks included. The most likely candidates are Palantir (Nasdaq: PLTR), MicroStrategy (Nasdaq: MSTR), and Axon Enterprises (Nasdaq: AXON). While all three stocks could see strong gains tomorrow if its announced they’re joining the Nasdaq-100, keep in mind that momentum stocks have also fallen recently when they unexpectedly weren’t included in indexes.