Jim Iuorio, for CME Group
At a Glance
- AI continues to be a major force, propelling NVIDIA to the top market cap in the Nasdaq-100.
- CME Group's Micro E-mini Nasdaq-100 futures and Spot-Quoted Nasdaq-100 futures offer traders the flexibility to manage risk in a capital efficient way.
The Nasdaq-100 has seen a significant surge this year, driven by the success of major technology firms and their advancements in artificial intelligence (AI) and innovation. However, with each earnings season brings its own set of challenges, and investors must be prepared to navigate potential market uncertainty.
Big Tech's Dominance
In the first half of 2025, the Nasdaq-100, which is often seen as a gauge of the technology sector's health, has experienced a tumultuous journey. As of July 3, 2025, the Nasdaq-100 was up nearly 9%, but behind this figure lies a more complex story of market resilience and rapid shifts in sentiment.
The year began with significant downward pressure on the index. From late February to April 8, the Nasdaq-100 lost more than 25% of its value amid global trade concerns. However, April 8 marked a turning point, with the index subsequently rising nearly 40% to reach new all-time highs. This rebound is intriguing and can be attributed to several potential factors. The market low on April 8 seemed to be an emotional response to the uncertainty surrounding tariff policies. However, by mid-April, it became apparent that the actual impact of these policies was less severe than initially expected, and the timing of their effects had been delayed.
Contrary to widespread analyst warnings that tariffs could exacerbate inflation, the Consumer Price Index (CPI) actually decreased from 2.85% in the spring to 2.4% in May. The slight increase to 2.7% in June was largely attributed to the rise in crude oil prices following the conflict between Israel and Iran. However, the broader decline in inflation has surprised many, including Federal Reserve Chairman Jerome Powell, who had cautioned about a potential inflationary rebound. Despite these concerns, financial markets, such as the S&P 500 and Nasdaq-100, are currently at all-time highs.
The 90-day tariff pause, initially set to end on July 9, 2025, was extended to August 1, 2025. The first six months of 2025 have shown that significant changes in macroeconomic government policy can lead to market disruptions and volatility. The passage of the "Big Beautiful Bill" may be one reason for the current market buoyancy, as equity markets tend to thrive on certainty, and the bill's passage has provided some.
The Next Six Months: Key Themes to Watch
Two major themes look to dominate the technology landscape. The most prominent is AI – a continuous tailwind that has propelled NVIDIA to become the largest market cap in the Nasdaq-100. This trend shows no signs of slowing down, with recent headlines such as Meta's investment in Scale AI receiving positive investor approval.
Another emerging narrative is energy. Both AI and quantum computing require substantial energy resources. To address this, several major tech companies are partnering with nuclear power providers. For example, Microsoft is developing plans to reactivate the Three Mile Island nuclear facility to meet its energy demands. These developments also appear to be a tailwind for the share prices of the various tech companies.
Navigating Earnings Season Volatility
As earnings season approaches, it's worth noting that the top ten companies in the Nasdaq-100 currently constitute approximately 50% of the total index by market capitalization. Six of these will report earnings in the last two weeks of July. While some market observers may be concerned about the index's concentrated nature and its vulnerability to volatility from potential earnings surprises, this concentration also presents a hedging opportunity without requiring individual stock positions.
Choosing the right index is essential for all traders and investors. CME Group offers a wide range of futures and options contracts, including the Micro E-mini Nasdaq-100 futures, which provide significant capital efficiency with a notional value of about $45,809 and an initial margin requirement of just 5% to 10%. In 2025, these futures hit a record average daily volume of 1.8 million contracts, accounting for 55% of the entire Micro E-mini futures suite. This surge in volume highlights their critical role in safeguarding portfolios against earnings volatility and broader market movements, making them a valuable tool for traders of every size.
Similarly, CME Group’s Spot-Quoted Nasdaq-100 futures have a notional value of about $2,300 and a margin requirement that is also in the 5% to 10% range. The lower margin requirements make it easier for retail investors to manage their risk without tying up large amounts of capital. This flexibility is especially important during earnings season, when market movements can be unpredictable and rapid.
CME Group futures are not suitable for all investors and involve the risk of loss. Full disclaimer. Copyright © 2025 CME Group Inc.
