The Nasdaq 100 has dropped in the past two straight days as the US dollar index (DXY) has surged to a multi-decade high. The tech-heavy index has dropped to $11,744, which is about 30% below the highest level this year. This performance is in line with other leading indices like the German DAX, Dow Jones, and CAC 40.
US dollar index strength
The Nasdaq 100 index has crashed because of a combination of factors. For example, it has crashed as investors reduce their earnings expectations because of the soaring inflation. Analysts believe that many companies will publish weak earnings during this season.
It has also declined sharply because of the rising fears of a recession in the United States. All conditions for a recession are there. For example, the unemployment rate is low, inflation is surging, and interest rates are rising. Historically, these conditions usually lead to a recession within a few months.
Another important factor that has dragged the Nasdaq 100 index and QQQ ETF is the stronger US dollar. The closely-watched dollar index has surged from less than $100 to over $108. Investors and businesses around the world have been moving to the US dollar, which is seen as a safe haven.