Tech Giants Weigh on Nasdaq 100 as Economic Data Sparks Rate Concerns

NASDAQ 100 US6311011026

The Nasdaq 100 index fell sharply on Wednesday, pressured by a broad sell-off in major technology stocks. The index closed down 1.6% at approximately 25,700 points. Fresh economic indicators and the ongoing corporate earnings season have combined to fuel uncertainty regarding the Federal Reserve's future monetary policy path.

The primary catalysts for the market's weakness were the latest U.S. Producer Price Index (PPI) and retail sales figures released today. These data points have raised significant questions about the direction of interest rates. A subsequent rise in the CBOE Volatility Index (VIX) further underscored growing investor nervousness.

Trading activity told a nuanced story. The index opened with a downward gap and managed to reach an intraday high of 25,873 points in early trading before sellers took control. The session low was established at 25,652 points. Notably, the trading volume of 123.26 million contracts remained below the three-month average, suggesting that selling conviction was not overwhelmingly strong.

Sector Rotation in Full Swing

A clear rotation away from technology and into more cyclical sectors was evident. While most major tech stocks declined, Intel and AMD bucked the trend, finding support after an upgrade from analysts at KeyBanc Capital Markets.

The energy sector demonstrated notable resilience, buoyed by rising oil prices, with WTI Crude trading around $61.75 per barrel. Meanwhile, the financial sector presented a mixed picture following quarterly reports from Bank of America, Citigroup, and Wells Fargo, which prompted divergent reactions from investors.

Technical Picture Tests Key Support Level

From a technical analysis perspective, the Nasdaq 100 is currently testing a crucial support level at 25,700 points. A sustained break below this threshold could trigger further downward momentum. The index is trading below its 50-day moving average, and the Relative Strength Index (RSI) is also showing weakness. During the session, resistance at the 25,900-point level proved too formidable to overcome.

Sentiment in the options market appears bearish, as indicated by a Put/Call ratio of 1.44. In a contrasting development, the yield on the 10-year U.S. Treasury note retreated to approximately 4.14%. This decline in yields typically provides relief to growth-oriented technology stocks, but failed to offer support in today's session. The coming trading days will be critical in determining whether the 25,700 support level holds or if selling pressure intensifies.