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The Nasdaq 100 rebound has run into former support as fears over AI regulation and spending linger. Fawad Razaqzada explains why he maintains a cautious forecast and where the key levels sit.
The Nasdaq sell-off deepened as doubts over AI spending, weak chip earnings and the threat of tighter AI regulation hit U.S. tech stocks.
An extraordinary sell-off has left Nasdaq 100 futures deeply oversold, but history suggests further downside is common before a sustained recovery takes hold.
The Democratic sweep in the US midterms delivered the negative dollar reaction I had anticipated, but that upsurge in stocks was not something I or many others had anticipated. Fears that a Democrat-controlled Congress would trigger a broader sell-off in technology stocks proved premature. Nevertheless, the sector remains under pressure. The political outcome may help explain the Nasdaq’s relative underperformance with futures falling 0.8% today. Sharp falls in shares of Arm and Qualcomm following their results are certainly not helping. While the removal of midterm uncertainty provided a broad-based boost to risk appetite yesterday, investors may be starting to price in the prospect of tighter regulatory scrutiny of Big Tech, particularly around AI, under greater Democratic influence in Congress. This could become a headwind for technology valuations, even if the immediate impact on corporate earnings remains unclear.
A potential Democratic sweep of Congress is adding to the AI trade's headaches, with Nasdaq 100 futures breaking below a major technical level. The implications for the dollar could be significant.
The Nasdaq 100 was finding some support at 28,000 after recent sell-off amid concerns about the AI trade. Even with oscillators oversold, the risk to the near-term forecast is tilted to the downside.
The Nasdaq 100 has printed a bearish monthly key reversal after a brutal October, with weak market breadth and heavy losses among AI beneficiaries raising the risk of further downside.
Disappointing results from a couple of major global technology names have put the AI trade back under scrutiny, with Nasdaq 100 futures falling around 1% after giving up the post-FOMC gains seen overnight. For now, our short-term Nasdaq 100 forecast remains more on the cautious side of things than outright bearish. The index remains close to its record highs and continues to find dip buyers. But could that change soon?
The Nasdaq 100 sell-off is being driven by doubts over AI spending, as investors punish strong earnings that fail to justify stretched valuations.
From crude to AI, the forces driving US markets have changed dramatically. Thursday's Nasdaq rout triggered an extraordinary Treasury rally, but the dollar barely moved. What happens next could depend on Nasdaq support.
It has been a risk off day so far with stocks, gold, silver and cryptos all taking a plunge. The Japanese yen has emerged as the strongest currency, with risk sensitive antipodeans falling along with the euro – the latter down due to ongoing French bond market turmoil. Along with global indices, US index futures have taken a drop, threatening to undo what had looked like a promising rebound on Wall Street yesterday.
European indices recovered from a weaker start to turn positive by mid-morning trade, although US futures were still nursing small losses. Global indices were looking to add to their gains from the day before. Investors are weighing up encouraging earnings from SpaceX and Super Micro against elevated oil prices, which are limiting the upside for risk assets. We have more tech earnings coming up today which could shape the near-term Nasdaq 100 forecast.
Global stock markets have started the new week on an uneasy footing for the most part, although US technology sector was staging a recovery attempt. European equities have been firmly lower in this first half of Monday’s session, with the CAC 40 and IBEX among the biggest fallers as renewed political and fiscal concerns in France weigh on sentiment. The German DAX index was also down, while US indices had given up a good chunk of their sharp overnight gains, with the Dow futures turning negative, leading to a lower cash open. The Nasdaq and S&P 500 posted decent gains at the open after last week’s heavy losses, but the recovery looks fragile given the lingering pressure on technology stocks and growing doubts about the AI investment boom.
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