Nasdaq World Indices Weekly Wrap: AI Bubble Jitters, New Global Benchmarks and Rate‑Cut Hopes (Dec. 5

Between December 5 and 7, 2025, the major Nasdaq world indices – led by the Nasdaq Composite and Nasdaq‑100 – hovered close to record territory as investors priced in an imminent Federal Reserve rate cut, weighed fears of an AI‑driven tech bubble and digested news of a fresh currency‑hedged Nasdaq index for global investors.

On Friday, December 5, the Nasdaq Composite closed at 23,578.13, up about 0.31% on the day and roughly 22% year‑to‑date, outperforming both the S&P 500 and the Dow Jones Industrial Average in 2025. The Nasdaq‑100 ended at 25,692.05, up 0.43% on Friday and around 22.5% year‑to‑date, underscoring how tech mega‑caps continue to drive global equity benchmarks. ^[1]

1. How Nasdaq World Indices Traded Into the Weekend

Nasdaq leads a calm but positive week

Friday’s session capped a surprisingly quiet week on Wall Street after bouts of sharp volatility earlier in the quarter. The S&P 500 gained about 0.2% to 6,870.40, the Dow added 0.2% to 47,954.99, while the Nasdaq Composite climbed 0.3% (up 72.99 points) to 23,578.13. ^[2]

For the week, the Nasdaq advanced roughly 0.9%, beating the S&P 500’s 0.3% and the Dow’s 0.5%. Year‑to‑date, the Nasdaq is up a little over 22%, versus about 17% for the S&P 500 and 13% for the Dow, confirming that tech‑heavy Nasdaq benchmarks remain the engine of global equity performance in 2025. ^[3]

Global index tables tell a similar story. The Nasdaq‑100 and Nasdaq Composite now sit near the top of major world indices by year‑to‑date returns, with the Global Dow and other international benchmarks also posting strong double‑digit gains. ^[4]

Under the hood: tech and communication services in focus

Market wrap‑ups from U.S. outlets note that the Nasdaq’s outperformance on December 5 was driven by persistent strength in technology and communication services stocks, extending a multi‑week trend in which megacap tech names have stabilized after a volatile November. ^[5]

At the same time, small‑caps lagged: the Russell 2000 slipped around 0.4% on Friday, showing that risk appetite remains selective rather than indiscriminately bullish across the entire equity spectrum. ^[6]

2. Macro Backdrop: Cooler Inflation and a Pivotal Fed Meeting

PCE data supports rate‑cut expectations

The macro catalyst behind the rally in Nasdaq world indices over the December 5–7 window was a tame U.S. inflation print. The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred gauge, showed headline inflation around 2.9% year‑on‑year with core inflation near 2.8%, broadly in line with economists’ forecasts. ^[7]

This reinforced market expectations that the Federal Reserve will cut rates by 25 basis points at its December 10 meeting. Futures pricing and Fed‑watch tools suggest the probability of such a cut is close to 87%, according to coverage of pre‑market trading and Fed commentary. ^[8]

Lower policy rates are typically supportive of high‑growth, high‑duration assets such as the stocks that dominate the Nasdaq‑100 and the broader Nasdaq Global Index family. That helps explain why Nasdaq benchmarks outpaced many peers as traders digested the data. ^[9]

December 10 looms large for global indices

Nasdaq‑hosted analysis from The Motley Fool stresses that the December 10 Federal Open Market Committee (FOMC) meeting could be a turning point for global risk assets. A widely expected rate cut would confirm the market’s dovish narrative and likely support both U.S. and international indices; a surprise hold could jolt stocks that have rallied on the assumption of easier policy. ^[10]

For investors tracking Nasdaq world indices, the meeting matters not only for U.S. tech valuations but also for global capital flows into dollar‑denominated assets, AI‑linked strategies and Nasdaq‑branded thematic indices.

3. AI Bubble Fears vs. Fundamentals in the Nasdaq‑100

UK pension funds cut exposure to Nasdaq‑heavy U.S. indices

One of the most striking pieces of analysis in early December came from the Financial Times, which reported that several large UK pension schemes have been reducing exposure to U.S. equities, particularly those tied closely to the Nasdaq Composite and Nasdaq‑100, amid worries about a potential AI‑driven bubble. ^[11]

The article highlights three key concerns: ^[12]

Concentration risk – A growing share of index returns is coming from a handful of “Magnificent Seven” mega‑cap tech names such as Nvidia, Alphabet and Meta, raising questions about diversification.
AI euphoria – The Nasdaq has risen more than 20% in 2025 and has more than doubled since early 2023, stoking fears that enthusiasm around artificial intelligence could be overshooting fundamentals.
Retirement risk – Younger savers in defined‑contribution plans may be over‑exposed to U.S. tech‑heavy indices, making them vulnerable if the AI trade unwinds.

Some funds are redirecting capital toward UK, Asian and private markets, or shifting into more defensive U.S. names, underscoring that not all institutional investors are comfortable with current Nasdaq valuations. ^[13]

Nasdaq’s own research: “this time is different” (at least somewhat)

In a detailed research note published on December 5, the Nasdaq Index Research Team tackled the question head‑on: “Is AI Another Bubble for the Nasdaq‑100®?” The analysis compares today’s AI boom with the late‑1990s dot‑com bubble, using index‑level profitability and valuation data. ^[14]

Key conclusions from Nasdaq’s research include: ^[15]

Profitability is dramatically higher:
- Roughly 99.9% of the Nasdaq‑100’s market cap now comes from profitable companies, with about half of the index weight enjoying net margins between 25% and 50%, and another sizeable portion showing margins above 50% – led by chip makers like Nvidia and Broadcom.
- During the dot‑com era, more than 20% of constituents were unprofitable, and many profitable firms had thin margins.
Valuations are elevated but far below dot‑com extremes:
- At the peak of the 1990s bubble, the Nasdaq‑100 sported price‑to‑earnings ratios well above 100, and many top constituents traded at even more stretched multiples (with Yahoo! around 2,000x earnings at one point).
- Today, Nasdaq estimates that most of the index trades on trailing P/E multiples in the low‑30s, and more than three‑quarters of its market cap sits below a P/E of 60.
Performance is strong, not parabolic:
- Since the launch of ChatGPT, the Nasdaq‑100 has gained about 115%, comparable to early‑stage gains during the 1990s tech boom.
- However, the subsequent 253% surge that ultimately produced a 718% run‑up into the 2000 peak has no modern analogue yet, meaning today’s advance is far less extreme in magnitude.

Nasdaq’s bottom line: fundamentals, profitability and more moderate valuations mean “this time seems at least somewhat different,” even if AI‑related exuberance warrants caution. ^[16]

Taken together, the FT and Nasdaq perspectives frame the current AI trade in Nasdaq world indices as a tug‑of‑war between:

Institutional risk management (de‑risking from concentrated U.S. tech), and
Data‑driven evidence that today’s Nasdaq‑100 is built on a sturdier earnings base than its dot‑com predecessor.

4. Inside the Nasdaq Global Index Family: What “Nasdaq World Indices” Actually Cover

The phrase “Nasdaq world indices” doesn’t just refer to the flagship U.S. benchmarks. It encompasses a broad global index ecosystem designed to track everything from entire world equity markets to specialized AI and thematic strategies.

Core global benchmarks

Nasdaq Global Index (NQGI) – A float‑adjusted, market‑cap‑weighted index designed to capture over 98% of the world’s listed equity market capitalization, making it one of Nasdaq’s key “all‑world” benchmarks. ^[17]
Nasdaq Global TR Index – A total‑return variant that reinvests dividends, widely used by asset managers as a proxy for global equity performance net of distributions. ^[18]

Data from the St. Louis Fed’s FRED database shows that the Nasdaq Global Index, Nasdaq‑100, Nasdaq Composite, and dozens of regional and thematic indices (including AI, robotics, clean energy and ESG variants) are all updated daily, with observations running through December 5, 2025 – confirming that this broad family of Nasdaq world indices remains in active use as key gauges of global risk sentiment. ^[19]

Thematic and regional Nasdaq world indices

Beyond the classic composite and 100‑stock benchmarks, FRED and Nasdaq listings highlight a dense web of world indices, including: ^[20]

Nasdaq Global AI & Big Data Index
Nasdaq CTA Artificial Intelligence Index
Nasdaq‑100 Technology Sector Index
Nasdaq EURO 50, Nasdaq Japan, Nasdaq UK indices
Various Nasdaq Global Index Family offshoots in different currencies and regions

These indices underpin a growing range of ETFs, structured products and pension strategies, which is why movements in the core Nasdaq Composite and Nasdaq‑100 often ripple outward through a global network of Nasdaq‑branded benchmarks.

5. New Development: CHF‑Hedged Nasdaq‑100 Index Launching December 8

Nasdaq also used this week to roll out a new member of its world index family. In a Financial Products News release on December 5, the exchange announced the Nasdaq‑100 Currency Hedged CHF Notional Net Total Return Index, set to begin disseminating on December 8, 2025 via the Nasdaq Global Index Data Service (GIDS). ^[21]

Key features: ^[22]

The new index is designed for investors whose home currency is the Swiss franc (CHF).
It aims to replicate the performance of the Nasdaq‑100 while hedging out currency risk by using one‑month forward FX contracts.
Data will be available in real time on GIDS and through Nasdaq’s global index platforms, with full component and weighting details provided via Global Index Watch and related services.

For global allocators, this launch reinforces how Nasdaq’s world indices are not just about exposure, but also currency management, giving non‑U.S. investors more tools to access high‑growth U.S. tech while managing FX volatility.

6. Global Forecasts: How Strategists See 2026 After Nasdaq’s 2025 Surge

While the past week was focused on immediate inflation and Fed decisions, Wall Street strategists have also been publishing longer‑term forecasts that shape sentiment around Nasdaq and other world indices.

Europe: Citi bullish on STOXX 600

On December 5, Citigroup set a 2026 year‑end target of 640 for the STOXX 600, implying about 10.5% upside from current levels. The bank argues that European stocks should benefit from fiscal spending and lagged effects of ECB rate cuts, even after a 14% gain in 2025. Citi favors cyclical sectors such as banks, travel & leisure, basic resources and industrials, while downgrading European tech to “neutral” on valuation grounds. ^[23]

U.S.: BNP Paribas sees S&P 500 at 7,500

A few days earlier, BNP Paribas projected that the S&P 500 could reach 7,500 by the end of 2026, roughly 10% above current levels, supported by a resilient U.S. economy and healthy earnings growth. The bank also expects the STOXX 600 to reach 650 in 2026, suggesting that European equities might outpace U.S. stocks in percentage terms. ^[24]

While these forecasts focus on S&P and STOXX benchmarks, they indirectly inform expectations for Nasdaq world indices, since:

A strong U.S. growth and earnings backdrop is generally supportive for Nasdaq‑heavy tech and growth stocks.
Strategists’ preference for Europe on valuation grounds may encourage some investors – like the UK pension funds above – to rebalance away from concentrated U.S. tech exposure, affecting flows into Nasdaq‑linked products. ^[25]

7. November Volatility and What It Means for December

Several December market reports underline that November was far from smooth for Nasdaq world indices:

A Thrivent Mutual Funds update notes that while the S&P 500 eked out a small gain in November, the Nasdaq Composite actually fell about 1.45%, pressured by concerns over whether tech companies can earn adequate returns on massive AI‑related capital expenditures. ^[26]
Other commentary describes a mid‑month pullback in U.S. equities and a resurgence of volatility before the recent rebound into December’s first week. ^[27]

The takeaway: the fact that Nasdaq world indices now sit near multi‑year highs doesn’t mean the route was straight up. Instead, the AI trade has already endured corrections, and December’s trajectory will depend heavily on:

The Fed’s December 10 decision and guidance,
Incoming data on employment and consumer demand, and
Whether AI earnings and cash flows continue to justify elevated valuations in Nasdaq‑linked indices. ^[28]

8. What to Watch Next Week if You Follow Nasdaq World Indices

Without giving individual investment advice, here are the key themes market participants are watching as of December 7, 2025:

Fed decision and press conference (Dec. 10)
- A 25 bps rate cut is widely expected. The bigger swing factor may be Fed Chair Jerome Powell’s outlook on growth and inflation into 2026. ^[29]
Earnings and guidance from AI‑linked leaders
- The sustainability of the AI trade will hinge on whether companies in the Nasdaq‑100 and Nasdaq Global AI indices can continue to translate massive capex into robust revenue and margin growth. ^[30]
Cross‑border flows into new currency‑hedged products
- Launches like the CHF‑hedged Nasdaq‑100 index will be watched as a test of international demand for hedged exposure to U.S. tech. ^[31]
Rotation between U.S. tech and the rest of the world
- With UK pension funds trimming U.S. allocations and strategists turning more constructive on Europe, any shift in flows between Nasdaq world indices and European benchmarks could shape relative performance into year‑end. ^[32]

9. Final Thoughts and Important Disclaimer

From December 5 to 7, 2025, the story of Nasdaq world indices has been one of strength with nuance:

Index levels near highs, driven by technology and AI‑linked mega‑caps.
A macro backdrop that appears increasingly supportive, with inflation cooling and rate cuts likely.
A healthy debate over whether the AI rally is a new bubble or a fundamentally justified re‑rating of some of the world’s most profitable companies.
Continued expansion of the Nasdaq Global Index Family, including new currency‑hedged indices that highlight how global and sophisticated the Nasdaq ecosystem has become.

This article is for informational and news purposes only and does not constitute financial advice, investment recommendation or an offer to buy or sell any security or index product. Market conditions can change rapidly; anyone considering investment decisions should do their own research or consult a qualified financial adviser.

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