Nasdaq Index: Tech Stocks Retreat, but Broadcom’s AI Rally Buoys Sentiment

What’s Driving the Market Today?

Stocks were mixed on Friday, with the S&P 500 set to end a three-week winning streak. By midday, the index was down 0.16%, while the Nasdaq Composite slipped 0.37%. The Dow Jones Industrial Average hovered near breakeven. Weekly performance shows the Dow losing 1.6%, the S&P 500 dipping 0.5%, and the Nasdaq outperforming with a 0.5% gain.

Sector Performance: Mixed Moves Across the Board

The energy sector led losses, falling 0.47% as oil prices retreated. Materials were also weak, down 0.86%, weighed by a decline in metals and mining stocks. Communication services saw the sharpest drop, losing 1.13%, reflecting broad selling pressure in media and telecom names.

In contrast, defensive sectors showed resilience. Utilities climbed 0.26%, while consumer staples added 0.22%, supported by steady demand and rotation into lower-risk assets. The technology sector posted a small 0.03% gain, supported by strength in semiconductor stocks.

Stock Highlights: Broadcom’s AI Surge Leads the Pack

Broadcom soared over 21% after surpassing fiscal Q4 earnings estimates and reporting a 220% year-over-year increase in AI-related revenue. The rally briefly pushed Broadcom’s market capitalization past the $1 trillion mark, boosting sentiment across the semiconductor space. Micron rose 2.14%, and Nvidia gained momentum earlier in the day, though broader tech indices struggled to hold gains.

Other notable moves included Marvell Technology, which added 7.14%, and Arm Holdings, up 2.77%. On the downside, Advanced Micro Devices fell 4.08%, and MongoDB tumbled 4.54% following investor profit-taking after recent strength.

Federal Reserve Commentary Raises Inflation Concerns

Former Dallas Fed President Robert Kaplan warned that inflation remains stubborn, citing mixed signals in services, food, and vehicles. He argued that current fiscal spending levels might sustain inflationary pressures, calling for a cautious approach to interest rate cuts. Kaplan’s remarks reinforced the likelihood that the Federal Reserve could maintain higher rates longer than anticipated.

Market Forecast: Where Could the Market Be Headed Next?

Technology stocks, particularly in AI-driven sectors, remain a bright spot, supporting a modestly bullish outlook for the Nasdaq. However, weak performances in economically sensitive sectors like energy and materials suggest broader market risks persist.

The S&P 500 may continue to consolidate as traders weigh macroeconomic signals and Fed policy implications. Expect technology stocks to drive outperformance in the near term, while defensive sectors provide a buffer against further downside. Traders should monitor upcoming inflation data and central bank commentary for clearer direction.