Why is the BetaShares Nasdaq 100 ETF taking a thrashing today?

Units in the ETF fell amid a broader sell off in US markets overnight.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • US markets were apparently caught off guard by comments made by Fed chair Jerome Powell
  • One comment was that he believes that they have a "ways to go" in terms of bringing inflation under control via interest rates
  • He went further, saying it would be "premature" for the Fed to discuss a pause in lifting interest rates

The BetaShares Nasdaq 100 ETF (ASX: NDQ) is down 2.71% today amid a broader sell-off across United States markets overnight.

Units in the exchange-traded fund (ETF) currently trade for $26.60 each. Earlier they fetched a high of $26.65 and a low of $26.53.

The S&P 500 Index (SP: .INX) is currently down 2.5%. Meanwhile, the Nasdaq Composite Index (NASDAQ: .IXIC) is down more at a 3.36% loss.

The shockwave of US markets falling overnight has also reached us here in Australia. All the sector indices are in the red today and the S&P/ASX 200 Index (ASX: XJO) is down too at a 1.84% loss.

There have been some major developments that could have caused the market to panic. Let's cover the highlights.

US interest rates rise

The US Federal Reserve approved a 0.75% interest rate hike yesterday, thus bringing the benchmark lending rate to a range of 3.75% to 4%.

This rate hike increase is the most aggressive attempt by the Fed to get inflation under control since the 1980s.

While my Fool colleague Bernd notes that the massive rate hike was expected, some of the comments made by the Federal Reserve's chair Jerome Powell in a post-announcement news conference have apparently caught investors off guard.

Some of these comments included the admission that inflation remains sticky and that interest rates may not yet have reached a level to sufficiently cool down the overheated economy.

Powell said:

We think we have a ways to go. Before we get to that level of interest rates that we think is sufficiently restrictive.

He continued:

The level of rates that we estimated in September, the incoming data suggests that's actually going to be higher. There is no sense that inflation is coming down… We're exactly where we were a year ago.

Another insight gleaned from Powell included that it may be "premature" for the Fed to discuss pausing interest rate hikes.

BetaShares Nasdaq 100 ETF price snapshot

The BetaShares Nasdaq 100 ETF is down 26.3% year to date. That's underperforming the ASX 200 which has lost 7.88% over the same period.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

The letters ETF sit in orange on top of a chart with a magnifying glass held over the top of it
ETFs

3 excellent ASX ETFs to buy for 2025

These ETFs are highly rated by analysts. Here's what you need to know about them.

Read more »

Four young friends on a road trip smile and laugh as they sit on roof of their car.
ETFs

4 popular ASX tech ETFs smashing new all-time highs today

Do you own any of these lucky ETFs?

Read more »

A woman looks internationally at a digital interface of the world.
ETFs

Looking for diversification through ASX ETFs? I'd buy these 2

These ETFs can provide exposure to great tech companies across the globe.

Read more »

Happy man holding Australian dollar notes, representing dividends.
ETFs

Invest $2,000 into these 5 ASX ETFs

Looking for quality options for your money? Check out these ETFS.

Read more »

ETF written in white with a blackish background.
ETFs

Why I think every retiree should own some ASX ETFs

ETFs could be a good place to put nest egg capital.

Read more »

The letters ETF with a man pointing at it.
ETFs

4 market-beating ASX ETFs to buy

These funds have beaten the market. Here's what they offer investors.

Read more »

A man points at a paper as he holds an alarm clock.
ETFs

3 ASX ETFs to buy and hold until 2050

These funds could be great long term options for investors looking to grow their wealth.

Read more »

Woman on a swing at a beach, symbolising passive income.
ETFs

One high-yield ASX dividend ETF to buy to generate passive income

This looks like an appealing, diversified option for dividends.

Read more »