Dow Jones, Nasdaq 100: Wall Street Eyes Quarter-End Finish at Record Highs

Heading into the Final Session, Wall Street Is Closing In on a Strong First Half

S&P 500 futures are up 0.17% early Tuesday and Nasdaq-100 futures have gained 0.29%. Dow futures are higher by about 95 points. The market is heading into the final trading session of the first half and the second quarter with numbers that look strong from a distance and messy up close. The Dow is up 8.6% for the year and sitting at a record. The S&P 500 has gained more than 8%. The Nasdaq leads at 11.1%. The second quarter has been even better with the S&P on pace for nearly 14% and the Nasdaq surging almost 20%.

Those numbers came through a war, an oil shock, a hawkish Fed transition, and a $2.3 trillion drawdown in the Magnificent Seven during June alone. The gains survived all of it. Whether they survive earnings season starting next month is the question the market is now asking.

Daily September E-mini Nasdaq-100 Index Technical Analysis

September E-mini Nasdaq-100 Index futures are edging higher on Tuesday, shortly before the cash market opening. After recovering the 50-day moving average on Friday, the index surged yesterday, putting it in a strong position to overcome a key short-term retracement zone that could determine whether the recent downtrend resumes, or the index makes a new record high.

The best support is the 50-day moving average at 29364.93. If it fails and sellers take out the minor bottom at 29160.50 then look for the selling to extend into the main bottom at 28512.00. This is also the trigger point for an acceleration to the downside with the retracement zone at 27142.25 to 26208.25 the major target zone along with the 200-day moving average at 26614.45.

The short-term range is 31100.00 to 28512.00. After a successful test of the 50-day moving average, the index is now testing its retracement zone at 29806.00 to 30112.75.

The index closed over the first 50% level at 29806.00 and is now challenging the 61.8% level at 30111.50. Overtaking this level will indicate the buying is getting stronger. If this leads to increased momentum, we could see a near-term test of the secondary lower top at 30975.50 and the all-time high at 31100.00.

If sellers block the rally at 30111.50 then look for a pullback to the 50% level at 29806.00. If this move fails to attract buyers then look for a full retreat into the 50-day moving average. Then our bearish analysis become relevant.

Daily Nasdaq Composite Index Technical Analysis

The Nasdaq Composite Index settled sharply higher on Monday, putting it in a position to gap the 50-day moving average at 25813.11. A higher cash market opening will put the index on the strong side of this indicator.

The main range is 27190.21 to 24980.38. After clearing the 50-day MA, the upside momentum from this move should lead to a test of its retracement zone at 26085.30 to 26346.05.

Sellers could come in on the first test of this zone. If successful, traders will go after the 50-day MA. Taking out this indicator could lead to a test of the two main bottoms at 25014.96 to 24980.38. If this fails, then the index is likely headed sharply lower with the main target the long-term retracement zone at 23940.23 to 23173.24. Inside this zone is the 200-day moving average at 23644.83.

The index could strengthen on a sustained move over the Fibonacci level at 26346.05. If the move creates enough upside momentum then look for the rally to extend into the secondary lower top at 26788.62, followed by the all-time high at 27190.21.

In summary, trader reaction to the 50-day MAs and the short-term retracement zones will set the tone for both the September E-mini Nasdaq-100 Index and the Nasdaq Composite Index on Tuesday.

The Magnificent Seven Lost $2.3 Trillion in June and Earnings Season Is Next

The CNBC Magnificent Seven Index fell about 10% in June. Microsoft dropped roughly 20%. Nvidia declined about 13%. Apple and Amazon each lost around 8%. The group that powered the market’s rally for two years just posted its worst month since the AI trade began and the selling was driven by one question. When does the spending produce profits.

Wedbush analyst Dan Ives called the environment another “gut check” for tech investors.

The long-term optimism around AI has not disappeared. The willingness to pay for it without evidence of returns has. These companies are spending hundreds of billions on chips, data centers, and infrastructure. The market rewarded the spending when it started. Now it wants receipts.

The investment profile of big tech has changed fundamentally. For years these were free cash flow machines with minimal capital requirements. Now they are balance-sheet intensive businesses pouring capital into AI buildouts. Fundstrat’s Tom Lee argues that investors will eventually see the infrastructure as a competitive moat rather than a drag. That argument needs earnings to back it up and July’s reports are the first real test.

Semiconductors Are Not Following Big Tech Lower

The Philadelphia Semiconductor Index climbed roughly 6% in June while the Magnificent Seven was losing $2.3 trillion. The chip sector has surged more than 90% this year. That divergence tells you the market is not abandoning the AI trade. It is repricing which part of the AI supply chain deserves the premium.

Demand for advanced chips remains strong. Cloud providers and tech companies are still expanding AI capabilities. Supply chain bottlenecks in memory chips have pushed prices sharply higher. Micron’s recent earnings beat reinforced that demand is healthy at the component level even while the companies buying those components are getting sold.

UBS expects cloud revenue growth to accelerate in the second half and sees few signs of AI supply chain constraints easing. The firm recommends diversifying within the AI theme toward data center operators and payment companies rather than concentrating in the Magnificent Seven alone. When a major bank is telling clients to stay in AI but spread the exposure away from the biggest names, the market is telling you the leadership within the trade is rotating.

Monday’s Rally Came on the Ceasefire and Stuck

The S&P 500 gained 1.18% Monday and the Nasdaq Composite rose more than 2% after the U.S. and Iran agreed to halt attacks and allow commercial ships through the Strait of Hormuz. The agreement followed several days of military exchanges that had kept the geopolitical bid alive in oil and the risk discount alive in stocks. Once the headlines eased, buyers came back to the same names they had been selling.

The rally held because the ceasefire removed the most immediate overhang. It did not resolve the AI spending question or the rate outlook. Those two issues are still sitting on the market heading into the second half. The difference is the market no longer has to price in an active military conflict on top of them.

What to Watch

The Nasdaq-100 is testing the 61.8% retracement level and a push above it opens the path to the all-time high. The Nasdaq Composite is in a position to gap above its 50-day MA and needs to hold it Tuesday. Both indexes are at decision points that determine whether June’s correction was a reset or the start of something deeper.

Earnings season in July is the next trial for the Magnificent Seven. Microsoft giving back 20% in June set the tone for what happens to big tech names that cannot show returns on their AI spending. Chips running 90% on the year while the companies buying those chips are correcting tells you the capital is not leaving AI. It is moving down the supply chain to the names that are selling product, not just buying it. The Dow closed the first half at a record. The Nasdaq led all indexes at 11.1%. And $2.3 trillion in market cap disappeared from seven stocks in one month. July answers whether that was a repricing or just the beginning of one.

More Information in our Economic Calendar.