Why the Nasdaq-100 Leveraged ETF TQQQ is Declining

The ProShares UltraPro QQQ (TQQQ) is an exchange-traded fund (ETF) designed to provide triple-leveraged exposure to the Nasdaq-100 Index. Recently, its value fell by approximately 10.81%, dropping to $82.09 following the Federal Reserve's meeting in December.

What to Know: The TQQQ ETF is heavily influenced by the market's attitude towards technology stocks. Unfortunately, these stocks have been facing challenges due to worries surrounding the Fed's cautious view on future monetary easing.

During the meeting, the Federal Reserve cut the federal funds rate by 25 basis points, bringing it down to a range of 4.25% to 4.5%. However, the Fed's announcement that they only expect to implement two more rate cuts over the next two years in 2025 sapped investor enthusiasm.

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Additionally, rising inflation expectations for 2025, particularly the core PCE inflation now predicted to reach 2.5%, have placed further pressure on growth stocks. These stocks, with their reliance on lower borrowing costs for expansion, are now facing difficulties as the Federal Reserve communicated a slower pace of rate reductions than many investors had anticipated. As a result, the decline in TQQQ’s value might reflect growing uncertainty regarding the tech sector's ability to prosper in a world where interest rates may stay elevated for longer.

Data shows that the TQQQ has seen a 52-week high of $93.79 and a 52-week low of $45.47, demonstrating its considerable volatility.

Read Next:

• Fed Slashes Interest Rates By 0.25% As Predicted: December Dot Plot Flags Only 2 Potential Cuts In 2025

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ETF, Stocks, TQQQ