Nasdaq 100 and S&P500: Can Futures Hold as Oil and Chip Risk Build?

Futures Edge Higher After Asia Selloff

Europe’s bid stopped the bleeding Wednesday morning after Asia delivered one of the ugliest chip sessions of the year, but the recovery is thin and the afternoon is loaded. Oil is back above $80 on a missile headline from Iran, Chair Kevin Warsh announces the Fed’s rate decision and holds a press conference this afternoon, and the semiconductor names that led the Nasdaq all year are still breaking down.

S&P 500 futures are up 0.16%. Nasdaq-100 futures have gained nearly 0.1%. Dow futures are barely positive, up 6 points.

Daily September E-mini S&P 500 Index Futures Technical Analysis

September E-mini S&P 500 Index futures are edging higher during the pre-market session. Traders shrugged off earlier weakness and are now testing a key short-term retracement zone at 7493.00 to 7540.50. Inside this zone is the 50-day moving average at 7531.35.

Given the resistance cluster, I think that trader reaction to the 50-day MA is going to determine the direction of the benchmark index on Wednesday.

Pay close attention to the momentum if sellers decide to defend the retracement zone and the 50-day MA. Strong downside momentum could take out the recent minor bottom at 7411.75 that may trigger a sharp break into the main bottoms at 7357.25 and 7292.25.

Upside momentum could drive the index through 7540.50, which could put main tops at 7632.00 and 7648.75 on the radar, followed by the all-time high at 7693.75.

Daily September E-mini Nasdaq-100 Index Futures Technical Analysis

September E-mini Nasdaq-100 Index futures are nearly flat early Wednesday after recovering from an early session loss that took the index as low as 27640.00. The sell-off stopped just short of yesterday’s low at 27603.50.

A trade through 27603.50 will extend the lower-low trading pattern for a fifth straight session. It will also put the index in a position to challenge the long-term 50% level at 27142.25 and the 200-day moving average at 26981.28. We could see a technical bounce on the first test of this area, but if it fails, the selling could possibly extend into the 61.8% level at 26208.25.

On the upside, the nearest resistance is the old bottom at 28512.00. Once we establish a bottom, the target will become 50% to 61.8% of the break from 29364.75.

Daily September E-mini Dow Jones Industrial Average Futures Technical Analysis

September E-mini Dow Jones Industrial Average futures, which appear to be immune to the tech sector volatility, are edging higher on Wednesday. It’s testing a 50% level at 53,000 and yesterday’s high at 53105.00. A trade through the latter will extend the current three-day rally, putting the minor top at 53113 and the record high at 53656 in focus.

A pullback under a 50% level at 52674 could create the momentum needed to challenge the 50-day moving average at 51965. This indicator has been controlling the market’s direction since the breakout above it on April 14.

Chip Selling Continues Out of Asia

The Kospi plunged more than 8% before trading was halted, then closed down 6% at 5,663.24. SK Hynix fell nearly 10%, Samsung Electronics lost more than 5%, and Japan’s Nikkei closed 1.49% lower with SoftBank Group down 7%. The VanEck Semiconductor ETF dropped 3.5% Tuesday and is now down more than 9% over the past week.

The Dow surged more than 500 points the same day the Nasdaq closed lower for a fifth straight session. Financials, health care and industrials caught the bid while the growth trade kept losing ground. The rotation is propping up the Dow. It is doing nothing for the Nasdaq, and the gap between the two indexes is getting wider by the session.

Microsoft, Meta and Qualcomm report after Wednesday’s close. Those numbers need to do more than beat estimates. The market wants evidence that AI spending is producing returns, and until the chip group finds a floor, the Nasdaq stays on the defensive.

Oil Jumps on Missile Attack Ahead of Fed

Iranian Revolutionary Guard forces launched multiple ballistic missiles at U.S. forces in the Middle East on Wednesday, according to U.S. Central Command, which said the missiles were intercepted. WTI crude jumped about 3.5% to around $82 and wiped out two days of progress toward a calmer energy picture in one headline. The timing could not be worse for the stock market. Warsh faces the press this afternoon with energy costs moving in the wrong direction again.

The Dow rallied more than 500 points Tuesday because falling energy prices gave rate-sensitive sectors room to breathe. That trade assumed the Iran situation was cooling. Wednesday’s attack says it is not, and every dollar crude adds from here tightens the conversation Warsh has to have about inflation this afternoon. Fed funds futures still put the chance of a hold near 70%, with a meaningful probability of a quarter-point hike. The hold is expected. What the market does not know yet is whether Warsh treats the energy spike as a reason to sound tougher.

Stocks in the News

Ford climbed in extended trading Tuesday after raising its full-year forecast. Visa pulled back on weaker-than-expected guidance. Procter & Gamble and Humana report before Wednesday’s opening bell.

What to Watch

The afternoon is stacked against the market. Warsh’s press conference comes with energy prices moving higher again and the chip group still in freefall out of Asia. The Dow has been living off rotation into financials, industrials and health care, but that trade only works if the rate picture cooperates. A hawkish tone from Warsh pulls the floor out from under the sectors that have been carrying the index. Microsoft, Meta and Qualcomm report after the close, and the Nasdaq needs at least one of those names to change the conversation around AI spending before the semiconductor selling drags the index into deeper trouble.

The S&P 500 is pressing into resistance around its 50-day moving average and that level is going to sort out the rest of the week. The Nasdaq has posted five consecutive sessions of lower lows and is closing in on its 200-day. The Dow is still within range of its record high, but even that strength is borrowed from a rotation that depends on the Fed not tightening the screws this afternoon.

More Information in our Economic Calendar.