Yellen’s Curveball Hammers Tech-Stocks. More of That to Come?

Nigel Frith

Stock Graphic of Flutuating Stock Prices

This week was always going to be a busy one in terms of planned announcements but unscheduled comments from Janet Yellen have just turned volatility up a notch. Speaking on Tuesday, the US Treasury Secretary suggested interest rates may have to rise and, in doing so, took 2.69% off the value of the Nasdaq 100 index.

US Tech 100 Cash with highlight around major price dip

Source: IG

The somewhat throwaway comments were made at the Atlantic economic forum when Yellen said:

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat … Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

Later in the day, there was some backtracking, especially as Yellen had overstepped the mark and commented on monetary policy issues managed by the US Federal Reserve. Yellen’s mandate is US fiscal policy and her suggestion that the economy is overheating will be brushed off by the officers of the Fed. It does, however, give rise to fears that the $5.3trn Covid relief package, which Congress has approved, could be the last act of support from the White House.

US Tech 100 Cash showing price dip trends

Source: IG

Despite Yellen later saying that an interest rate rise was “not something I’m predicting or recommending”, the damage had already been done for equity prices, and the shaky start to May was confirmed. Since mid-April, the Nasdaq 100 index had been trading in the range of 13780 – 14060, but Yellen’s comments were enough to cause a break to the downside. The 13780 level now forms a significant resistance to any tech stock share price recovery, and the hourly 20 SMA is also providing resistance to upward movement.

Thursday the 6th of May – Bank of England Statement

The events in the US have led to more attention being placed on the interest rate announcement due from the Bank of England on Thursday. The UK focused equity bulls are currently more optimistic and took the Yellen price plunge as an opportunity to buy the dips at the bottom of that market’s price range.

FTSE 100 Market Graph showing major price drop

Source: IG

The recovery in UK equity futures prices, which started after the closing bell in London, carried on through the Asian session and found more momentum after European markets opened on Wednesday. For the FTSE 100, the bounce off the support level marks 6920 – 6930 as an increasingly significant price range. Resistance in the region of 7040 remains, and Wednesday’s price move could love momentum as the countdown to the Bank of England’s announcement begins.

National Holidays are Clouding the Picture

Those looking to navigate the markets this week do need to keep an eye on the economic calendar. Monday’s UK national holiday was followed by ones in China, Japan and Thailand on Tuesday. With the markets being closed on those days, there is gapping between prices of the underlying equities and equity futures. Early session price volatility as the two markets recalibrate looks set to be a theme of the week.


If you want to know more about this topic, or have been scammed by a fraudulent broker, please contact us at [email protected]

Nigel Frith

Latest news

Olympic Legend Usain Bolt Lost $12m in Savings Scam
Usain Bolt loses $12m in an alleged investment scam Jamaican officials and the FBI are investigating investment manager Stocks and Securities Ltd Others are feared caught by the scheme Jamaican Olympic sprinter Usain Bolt has had a $12m savings and investment account he set up for his retirement wiped out. Read more
Phoney Pastors Caught Running $28m Church-Based Ponzi Scheme
Churchgoers targeted by scammers posing as pastors A total of $28m fraudulently taken from largely immigrant community Promises of ‘financial freedom through God’ undone by the fact the project was a massive Ponzi scheme Deception, distraction, and abuse of trust are standard tools of fraudsters. Read more

Safest Forex Brokers 2023

Broker Info Best In Customer Satisfaction Score
#1 AvaTrade LogoYour capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
#2 BlackBull Markets LogoYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
#3 73 % of retail CFD accounts lose money Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
#4 Forex Broker eToro Logo67% of CFD traders lose Founded: 2007 Global CFD & FX Broker
Number One Broker
#5 Plus500 Logo79 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008 Global CFD Provider
Number One Broker
Best Trading App Visit broker

    Forex Fraud Certified Brokers

    IC Markets Logo
    ATFX Logo Logo
    HYCM Logo
    XM Logo
    Exness Small Logo
    OctaFX Logo
    City Index Logo
    AvaTrade logo
    BlackBull Markets Logo
    LegacyFX Small Logo
    skilling logo
    IQ Option Logo