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

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.

The post Why is the BetaShares Nasdaq 100 ETF taking a thrashing today? appeared first on The Motley Fool Australia.

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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.

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