The Nasdaq 100 faced a substantial setback on Thursday, experiencing a 1.6% decline as traders approached the market with caution prior to Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Symposium slated for Friday at 10:00 a.m. ET.
Investors were eager for insights on future interest rate trajectories and the overall economic landscape, leading to a shift towards risk aversion throughout the session.
Market Reaction to Private Sector Data
Market sentiment took a bearish turn after 11 a.m. when traders absorbed stronger-than-expected private sector activity growth for August.
This unforeseen data dashed hopes for a larger-than-expected 50-basis-point rate cut by the Fed in September. Consequently, the market-implied probabilities for such a rate cut plummeted to 24%, a stark decline from the 38% recorded just a day earlier.
This shift in expectations prompted a general market retreat, with traders opting to secure profits following a 13% surge in the Nasdaq 100 index tracked by the Invesco QQQ Trust, starting from its early August lows. Thursday’s downturn marked the most significant drop for tech stocks since August 5.
Tech Stocks and Semiconductor Struggles
Semiconductor stocks bore the brunt of the slump, with the iShares Semiconductor ETF plunging 3.4%, marking its worst performance since August 2.
Out of the 100 components in the Nasdaq 100, 80 ended the day in negative territory, signaling broad-based weak sentiment across the board.
The poorest performers of the day included Moderna Inc., down 6.5%, Intel Corp., down 6.1%, and MongoDB Inc., down 5.8%.
Among the significant drags from the Magnificent 7 tech giants on the Nasdaq 100’s performance were NVIDIA Corporation, Microsoft Corporation, Tesla, Inc., Amazon.com, Inc., and Broadcom Inc.
Critical Support Level Focus
Technically, the Nasdaq 100 closed the session right at the crucial support level provided by its 50-day moving average.
The market’s response in Friday’s session will be pivotal in determining the sustainability of this support level and the potential for a market rebound. If the index breaches this key level, the subsequent support zone rests around the 18,839 mark, aligning with the 100-day moving average.
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Image created using artificial intelligence via Midjourney.