Nasdaq Composite extends 3-day winning streak on September Fed cut bet

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Sholanke Dele

29.08.2025

Nasdaq Composite extends 3-day winning streak on September Fed cut bet — Nasdaq extends gains ahead of PCE report

The Nasdaq Composite Index has entered the final trading sessions of August with a string of three consecutive daily gains, bringing the benchmark close to the record levels reached earlier this month.

While the price recovery has been steady, the volume picture has presented a mixed signal. The last two sessions recorded lower participation, and yesterday’s gain came on the weakest daily volume in more than four sessions. That divergence suggests the rally has been advancing on lighter conviction, even as the index pushes toward fresh highs.

- Nasdaq extends three-day winning streak while volume weakness questions rally conviction.

- Traders await July PCE report as inflation could shape September Fed decision.

- Strong GDP growth and jobless claims data test expectations for Fed rate cuts.

Hopes of easier monetary policy has been a key driver of sentiment due to propping up valuations. Futures markets currently price in an 85% probability that the Federal Reserve will cut interest rates by 25 basis points in September. The prospect of lower borrowing costs has been fuelling appetite for growth stocks, supporting the Nasdaq’s advance. Investors view lower policy rates as a way for valuation multiples to continue expanding, which has been central to the index’s strong performance through August.

Nasdaq price dynamic (June - August 2025). Source: Tradingview

Still, signs are emerging that the Federal Reserve may not be under immediate pressure to ease policy. Thursday’s data showed initial jobless claims stayed low, reinforcing the view that layoffs remain contained and unemployment could be stabilising. At the same time, the government revised second-quarter GDP growth up to 3.3% on an annualised basis, stronger than earlier estimates. Corporate cash flow was also reported at a record $4.0 trillion annual rate, giving businesses a strong base for capital spending. These factors highlight economic resilience, which could limit the Fed’s urgency to cut rates.

Nasdaq traders eye July PCE report for confirmation on inflation trend

Attention now turns to the July Personal Consumption Expenditures Price Index report, due later today. Headline PCE is forecast to rise 2.6% year on year, while core PCE is expected at 2.9%. A stronger-than-expected outcome would strengthen the dollar and likely temper expectations for rate cuts, creating pressure on the Nasdaq and risking a retracement into the weekly close. On the other hand, if inflation data matches or falls below expectations, the index could extend its recovery, marking a fourth consecutive advance and potentially breaking above the previous record high near 21,800.

From a technical perspective, support remains strong. On the four-hour chart, the Nasdaq Composite is holding firmly above the 20 and 50 exponential moving averages. The daily and H4 Relative Strength Index readings both remain in bullish territory, confirming that momentum has not broken down despite the easing in volume. This technical structure continues to encourage traders to hold long positions and look for higher targets into the month-end.

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