Nasdaq 100, Dow Jones, S&P 500 News: Semiconductor Sell-Off Drags Tech Sector Down

Market Movements Driven by Tech Selloff and Sector Shift

The U.S. stock market showed mixed performance on Monday, with the Dow Jones Industrial Average rising while the tech-heavy Nasdaq declined. This split was mainly caused by a significant drop in technology stocks, especially in the semiconductor sector.

At 14:55 GMT, the Dow is trading 39538.45, up 388.12 or +0.99%. The S&P 500 Index is at 5474.56, up 9.94 or +0.18% and the Nasdaq is trading 17607.58, down 81.78 or -0.46%.

Nvidia, a leading company in the artificial intelligence space, fell 3%, extending its losses over the past three sessions to nearly 13%. Other chip stocks, including Taiwan Semiconductor Manufacturing and Qualcomm, also decreased, pulling down the Philadelphia Semiconductor Index by 1.3%.

The broader S&P 500 information technology sector dropped to a near two-week low, while other sectors like energy, financials, and utilities showed strength, gaining more than 1% each. This sector shift saw investors moving funds from tech into other areas of the market.

Economic Data and Fed Watch

Investors are closely watching for Friday’s release of the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure. This report is expected to show a slowdown in price increases and could significantly influence the Fed’s interest rate decisions.

Market participants currently estimate a 60% chance of a 25-basis-point rate cut in September. However, recent statements from Fed officials have maintained a stance of higher-for-longer interest rates, creating some uncertainty in the market.

Corporate News

In company developments, Under Armour agreed to pay $434 million to settle a 2017 class action lawsuit over sales disclosures. RXO announced plans to buy UPS’s Coyote Logistics business unit for $1.025 billion, causing its stock to jump 16.1%.

Market Forecast

Looking ahead, the short-term outlook for major indices appears mixed:

Dow Jones Industrial Average: The Dow is likely to continue its upward move in the near term. The shift into value-oriented sectors like financials and energy, which are well-represented in the Dow, should provide support.

S&P 500: The broader market index may see moderate gains. While tech weakness could slow progress, the S&P 500’s diverse sector makeup should help balance this out, potentially leading to modest increases.

Nasdaq Composite: The tech-heavy Nasdaq faces near-term challenges. The ongoing selloff in major tech names, particularly semiconductor stocks, could continue to weigh on the index.

This forecast is based on the current sector shift trend and the market’s reaction to upcoming economic data, especially the PCE report. If inflation data comes in lower than expected, it could boost all indices by strengthening the case for earlier Fed rate cuts. However, a strong U.S. dollar and any signs of persistent inflation could limit gains, particularly for the Nasdaq.

Investors should closely monitor economic releases, Fed comments, and individual stock movements in key sectors to gauge potential changes in these market trends.

Technical Analysis

Although E-mini S&P 500 Index futures are slightly better as we near the mid-session on Monday, the benchmark index remains vulnerable to a near-term correction due to the potentially bearish impact of last Thursday’s closing price reversal top.

The short-term range is 5205.50 to 5588.00. Its pivot at 5396.75 is the primary downside target. A trade through 5588.00 will negate the chart pattern and signal a resumption of the uptrend.