Invesco QQQ ETF Hits $633 as Tech Surge and Fed’s Hawkish Cut Power Nasdaq Rally

Invesco QQQ Trust (NYSEARCA:QQQ) Rises to $633 as Tech Earnings and Fed Policy Divergence Drive Nasdaq Momentum

The Invesco QQQ Trust ETF (NYSEARCA:QQQ) extended gains this week, climbing toward $633 as investors balanced strong tech earnings with ongoing uncertainty over the Federal Reserve’s next move. Despite mixed market sentiment following the Fed’s 25 bps rate cut and cautious guidance from Chair Jerome Powell, QQQ continues to reflect underlying resilience in the Nasdaq-100 Index (NDX), led by heavyweight constituents like Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL). The ETF has advanced more than 7.2% month-to-date, buoyed by easing U.S.–China tensions after the Trump–Xi summit and renewed optimism for corporate earnings growth into 2026.

Fed’s Hawkish Tone Adds Caution as Yields Stay Elevated

The Federal Reserve’s decision to cut rates by 25 basis points brought the federal funds range to 3.75%–4.00%, but Powell’s post-meeting remarks underscored that further easing in December was “not a foregone conclusion.” Treasury yields remained firm, with the 10-year yield closing at 4.11%, keeping financial conditions tight. The U.S. Dollar Index (DXY) strengthened to 98.53, highlighting the market’s belief that the Fed will remain restrictive for longer. For growth-heavy funds like QQQ, higher yields traditionally weigh on valuations, yet the ETF’s technology exposure continues to offset rate pressure through superior earnings momentum.

Tech Earnings Fuel Gains Despite Valuation Risks

Recent quarterly results from the Nasdaq’s top holdings have reignited confidence in U.S. technology leadership. Alphabet surged 8% after reporting a sharp rebound in cloud and advertising revenue, while Microsoft fell 2% following a one-time $3.1 billion OpenAI-related charge. Meta Platforms plunged 9% after a $15.93 billion expense tied to Trump’s “One Big Beautiful Bill” Act, though investors largely dismissed the write-down as non-recurring. The overall resilience of tech earnings—particularly in AI, semiconductors, and digital advertising—has supported QQQ’s rebound from its October low near $610, propelling the ETF above its 50-day EMA at $625 and approaching resistance around $637–$640.

Inflation Cooling, But Valuations Remain Stretched

The September CPI report showed headline inflation at 3.0% YoY and core at 3.0%, slightly above the Fed’s target but moderating from earlier peaks. Service sector inflation eased to 3.5%, the lowest since 2021, while durable goods inflation turned positive at 1.8%. These data points suggest a gradual disinflation trend but still justify Powell’s caution. With QQQ’s price-to-earnings ratio at 27.1 and price-to-sales at 5.89, valuations remain expensive compared to historical averages. Nonetheless, investors continue rotating into tech as a relative growth hedge, betting on structural tailwinds from AI investment and digital transformation.

Trade Peace Between U.S. and China Boosts Sentiment

Markets welcomed a breakthrough at the Trump–Xi summit, where both leaders agreed to cut U.S. tariffs on Chinese imports by 10%, reducing the average rate to 47%. In exchange, Beijing pledged to curb fentanyl exports and expand agricultural purchases. The announcement sparked optimism across global indices, lifting both QQQ and the Invesco China Technology ETF (CQQQ). Easing trade friction supports semiconductor supply chains and multinational tech firms, key drivers within QQQ’s portfolio, which holds 101 equities with technology and communication services accounting for nearly 63% of total weighting.

Portfolio Breakdown: Heavyweight Techs Lead the Charge

QQQ’s top holdings—including Nvidia, Apple, Microsoft, Amazon, and Meta—comprise approximately 52% of the ETF’s weight, underscoring the fund’s concentration in high-growth mega-cap names. Nvidia remains the largest single holding, benefiting from robust GPU demand tied to AI infrastructure expansion. With AI-driven revenue expected to grow at a compound annual rate of 37% through 2027, Nvidia’s contribution alone could sustain earnings-per-share (EPS) growth across the entire Nasdaq-100. Meanwhile, exposure to healthcare and consumer discretionary sectors provides some diversification, though the ETF’s volatility remains closely tied to the tech cycle.

Macroeconomic Headwinds and Policy Uncertainty Persist

Despite strong earnings momentum, QQQ faces several macro risks. The Fed’s slow pivot, persistent 3%+ inflation, and record-high fiscal deficits could constrain risk appetite. Globally, concerns over China’s economic fragility—highlighted by youth unemployment at 17.7% and weak domestic demand—add a layer of uncertainty to global growth. Moreover, the Trump administration’s interventionist stance, including direct stakes in key industries, introduces volatility tied to political outcomes ahead of the 2026 midterm elections.

Technical Outlook: Bullish Structure Intact Above $625

On the technical front, QQQ maintains a bullish trend within a rising channel established since May. Support lies near $625 (50-day EMA) and $612 (previous consolidation zone), while a sustained breakout above $640 could propel the ETF toward the $655–$660 range, last seen in July. Momentum indicators remain constructive: RSI (14) hovers at 61, suggesting further room before overbought conditions, and MACD signals an ongoing bullish crossover. A decisive move beyond $637 would likely attract momentum funds, reinforcing upside potential into year-end.

Comparative Valuations: QQQ vs. CQQQ Divergence

While QQQ’s P/E of 27.1 looks rich, its expense ratio of 0.20% and yield of 0.45% make it more cost-efficient than CQQQ, which trades at 25.6x earnings, carries an expense ratio of 0.65%, and yields just 0.19%. Both funds are positioned to benefit from government-driven tech investment, but QQQ’s exposure to U.S. innovation leadership—spanning AI, semiconductors, and cloud infrastructure—offers stronger near-term earnings visibility. Tracking error over five years averages 7.97% for QQQ, compared with 30.28% for CQQQ, reinforcing QQQ’s stability advantage in volatile global markets.

Outlook and Investment Stance: QQQ Holds Bullish Bias Toward $655

With corporate earnings holding firm, trade tensions easing, and disinflation gradually emerging, NYSEARCA:QQQ retains a constructive outlook heading into November. While overvaluation risk and policy uncertainty warrant caution, the ETF’s dominance in growth sectors positions it as a prime vehicle for investors seeking exposure to U.S. innovation and AI-driven expansion. As long as QQQ remains above $625 support, the bullish structure is intact with a near-term upside target of $655, representing a 3.5% gain from current levels. Based on earnings resilience, macro tailwinds, and technical confirmation, QQQ remains a Buy with short-term bullish momentum supported by strong capital inflows and technology leadership.

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