Nasdaq 100 Faces Uncertain Path as Tech Stocks Struggle and Fed Policy Remains Unclear

Stock Futures Edge Lower as Tech Pressures Major Indexes

Stock futures traded slightly lower on Tuesday, reflecting ongoing market uncertainty following a dip in technology shares that weighed on the S&P 500 and Nasdaq Composite. Meanwhile, the Dow Jones Industrial Average defied broader market trends, closing at a record high. This mixed performance highlights investors’ shifting focus as they prepare for a critical week of earnings and economic data.

At 12:40 GMT, Dow Futures are trading 41280.00, down 55.00 or -0.13%. S&P 500 Index futures is at 5629.75, down 7.25 or -0.13% and Nasdaq 100 Index futures are trading 19563.50, down 27.75 or -0.14%.

Paramount Global Faces Setback

Paramount Global’s stock fell nearly 5% after Edgar Bronfman Jr. withdrew his bid to acquire the media conglomerate. This development potentially clears the way for Skydance Media to acquire the company, owned by Shari Redstone. Paramount has indicated that the deal with Skydance is expected to finalize in the first half of 2025. Investors appear cautious as the company navigates this transition, with market participants weighing the implications of the bid withdrawal on Paramount’s future valuation.

Insider Sales Hit Cava Group

Shares of Cava Group dropped more than 8% following disclosures that several corporate insiders and a major shareholder were selling portions of their holdings. Insider selling often raises concerns among investors, signaling potential doubts about the company’s near-term prospects. The timing of these sales, ahead of key economic data releases and earnings reports, has exacerbated market unease.

JD.com Boosted by Buyback Program

In contrast, JD.com saw its stock rise by about 3% after announcing a substantial $5 billion share buyback program, set to run from September 2024 through August 2027. This move is seen as a positive signal of confidence from the Chinese e-commerce giant, which may bolster shareholder value and provide support to its share price amid broader market volatility.

Tech Stocks and Rate Cut Speculation in Focus

The broader market’s mixed performance on Monday, characterized by a decline in tech stocks and gains in less favored sectors like energy, suggests a potential sector rotation. Investors appear to be rebalancing portfolios, possibly moving out of high-growth tech stocks into more defensive areas. The upcoming earnings report from Nvidia, a key player in the AI space, is eagerly anticipated, with its results likely to influence sentiment across the tech sector.

Market participants are also closely watching the Federal Reserve, as speculation mounts over a potential interest rate cut at the September 17-18 policy meeting. Fed Chair Jerome Powell’s recent comments have fueled expectations, with traders nearly unanimous in forecasting at least a 25-basis-point reduction. However, Powell’s lack of specificity regarding the timing and magnitude of the cut leaves room for uncertainty, which may contribute to market volatility in the coming days.

Market Forecast

Given the current market conditions, a cautious outlook is warranted. While the Dow has shown strength, the pressure on tech stocks and uncertainty surrounding the Fed’s next move suggest a volatile environment. Traders should brace for further sector rotation and potential short-term weakness, particularly in tech-heavy indices, as the market digests incoming economic data and corporate earnings.

Technical Analysis

E-mini S&P 500 Index futures are looking a little top heavy after reversing yesterday’s gains and finishing lower. The key area to watch today is 5585.75. Momentum will shift if this level fails, suggesting traders may test the 50-day moving average at 5537.88.

On the upside, a drive through 5669.00 will reaffirm the uptrend with the record high at 5721.25 the next objective.