Nasdaq 100: Tech Stocks Decline as Investors Await Federal Reserve’s Policy Decision

Market Overview

U.S. stock indexes displayed a mixed performance on Tuesday as investors processed corporate earnings and awaited the Federal Reserve’s policy meeting. The Dow edged higher, while the Nasdaq declined and the S&P 500 fluctuated.

At 14:50 GMT, the Dow Jones Industrial Average is trading 40732.98, up 193.05 or +0.48%. The S&P 500 Index is at 5464.08, up 0.54 or +0.01% and the Nasdaq 100 Index is trading 17315.28, down 54.92 or +0.32%.

Sector Analysis

The market showed a mixed sectoral performance, with notable movements across various industries:

Financials emerged as a top performer, gaining 1.4% and indicating renewed investor confidence in banking and financial services stocks.

Energy stocks also showed strength, rising 1.01% amid fluctuating oil prices and global supply concerns.

Technology, a usual market leader, experienced a pullback with a 0.83% decline, potentially due to profit-taking after recent rallies.

Consumer Discretionary stocks remained resilient, up 0.2%, suggesting continued consumer spending despite economic uncertainties.

Real Estate and Communication Services both posted gains, up 0.47% and 0.42% respectively, showing defensive positioning by some investors.

Earnings Highlights: JetBlue Airways Soars

JetBlue Airways shares surged 20% after reporting an unexpected profit and announcing plans to defer $3 billion in aircraft spending. The airline’s cost-cutting measures and route optimization strategy aim to improve profitability in a challenging market.

Pfizer’s stock rose 1.6% following better-than-expected second-quarter results. The company benefited from its cost-cutting program and strong sales across its portfolio, including its Covid antiviral pill Paxlovid.

Merck shares dropped 8% despite strong second-quarter performance, as the company issued weaker-than-expected full-year earnings guidance.

Corporate New: CrowdStrike Plunges

CrowdStrike shares fell over 8% following reports that Delta Air Lines is seeking damages related to a recent outage. Berkshire Hathaway continued its selling streak of Bank of America shares, reducing its stake for nine consecutive days.

Procter & Gamble faced challenges, reporting its third consecutive revenue miss. The company cited weakening pricing power and poor demand in China as key factors affecting its performance.

Economic Indicators

Job openings in June slightly decreased to 8.18 million, while the hiring rate reached its highest level in nearly 11 years, excluding Covid-impacted data. This suggests a continued tight labor market despite some cooling in job availability.

Market Forecast

The overall earnings season has been positive, with about 80% of reporting S&P 500 companies beating expectations. This, combined with the Federal Reserve’s upcoming policy decision, suggests a cautiously optimistic short-term outlook. Investors should watch for potential signals regarding future rate cuts, which could further support risk assets if economic conditions remain stable.

Technical Analysis

The E-mini Nasdaq-100 Index is trading lower on Tuesday and on the weak side of a major pivot at 19178.50. Not only is this resistance, but it’s also the trigger point for an upside breakout if the volume is strong enough.

A sustained move over 19178.50 could eventually reach the 50-day moving average at 19706.50, followed by a short-term pivot at 19742.25.

A sustained move under 19178.50 will signal the presence of sellers. Taking out 18883.25 or last week’s low will indicate the selling pressure is getting stronger. This could trigger a collapse into a minor bottom at 18501.00 and eventually the 200-day moving average, currently at 18107.57.