Why is the Betashares Nasdaq 100 ETF leaping ahead on Thursday?

The Betashares Nasdaq 100 ETF (ASX: NDQ) is currently up by 2.28% as investors buy into the exchange-traded fund (ETF).

As readers may already be aware, this ETF looks to track 100 of the biggest non-financial businesses on the NASDAQ.

The important thing to note is that the performance of ETFs is dictated by the returns of the underlying holdings they own in the portfolio. If the group of businesses collectively go up in value, this benefits the ETF as well.

Overnight, United States shares had a strong run and this has helped the Betashares Nasdaq 100 ETF.

What happened overnight?

Considering Apple, Microsoft, Amazon.com, Tesla and Alphabet make up more than 40% of the portfolio, let’s look at how those particular businesses’ share prices performed.

The Apple share price went up by 0.9%.

The Microsoft share price rose by 1.9%.

The Amazon share price has risen 2.7%.

The Alphabet share price climbed 2.5%.

The Tesla share price was the strongest riser of the group, increasing 3.4%.

Why did the share market rise?

Share prices change all the time, some days businesses go up in value and sometimes they drop.

2022 has seen some big declines, but some investors may be seeing an opportunity, which is helping the Betashares Nasdaq 100 ETF.

According to reporting by CNBC, the reason for the positive day on the US share market was that Fed vice chair Lael Brainard reaffirmed that the central bank would do what it takes to stifle inflation, while also noting the risks of going too far. CNBC suggested that investors focused on the point of going too far.

Brainard said:

At some point in the tightening cycle, the risks will become more two-sided. The rapidity of the tightening cycle and its global nature, as well as the uncertainty around the pace at which the effects of tighter financial conditions are working their way through aggregate demand, create risks associated with overtightening.

This could be good news because it may mean light at the end of the tunnel when it comes to interest rate rises stopping.

Interest rates are important because they can affect the valuation of most, or all, assets. As Ray Dalio, founder of Bridgewater Associates, once said:

It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

Betashares Nasdaq 100 ETF share price snapshot

Despite today’s rise, the NDQ ETF is still down by around 4.5% over the last month and 22% in 2022.

The post Why is the Betashares Nasdaq 100 ETF leaping ahead on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Is the BetaShares NASDAQ 100 ETF the best index fund on the ASX?
• 2 of the best ETFs for ASX investors to buy in September
• Why is the Betashares Nasdaq 100 ETF (NDQ) tumbling 4% on Monday?
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• Why is the BetaShares NASDAQ 100 ETF having such an awful start to the week?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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