Nasdaq 100 and S&P500: Tech Stocks Slide as US Indices Break Key Support Today

Stock Market Selloff Accelerates as Tech Giants Crumble and Key Support Levels Fail

The major U.S. stock indexes are down at the mid-session for a second straight session on Wednesday, with the sell-off fueled by weaker tech and growth stocks. Weakness in the banking sector pressured the market early, but conditions worsened as investors booked profits after the recent run-up and moved to cash.

Market Snapshot: Nasdaq Leads Decline With 1.56% Drop

At 18:02 GMT, the Dow Jones Industrial Average is trading 48,909.08, down 282.91 or -0.58%. The S&P 500 Index is at 6,892.05, down 71.69 or -1.03% and the Nasdaq Composite is trading 23,340.55, down 369.33 or -1.56%.

Technical Breakdown: Nasdaq-100 Plunges Through Critical Support Levels

Technically, March E-mini Nasdaq-100 index futures took a hard hit when they crossed to the weak side of two trendlines at about 25,680.50, before plunging further after breaking through the 50-day moving average at 25,601.50. The futures contract is now testing 50% of the 26,670.00 to 24,153.50 trading range at 25,441.75. This is another trigger point for an acceleration to the downside.

S&P 500 Breaks Key Trendline From November Lows

March E-mini S&P 500 Index futures are also under pressure after breaking trendline support at 6,949.50. This trendline started with the November 21 main bottom at 6,583.00 and was tested at 6,771.50 on December 18 and at 6,866.75 on January 2.

Persistent selling pressure could drive this market into the 50-day moving average at 6,888.00. If this level fails, look for a further drop into 50% of the 6,583.00 to 7,036.25 trading range at 6,809.50.

Sector Rotation: Energy Surges While Technology Tanks

Six out of 11 sectors are lower at the mid-session with energy leading with a 2.53% gain and technology posting the largest decline at 2.09%.

Nearby crude oil futures are leading the energy sector higher with a 1% gain late Wednesday as speculative traders bet on a possible supply disruption in Iran. Meanwhile, supply continues to be a major concern with the EIA reporting another inventory build in this week’s report.

China Cybersecurity Ban Hammers Tech Stocks

The technology sector is being dragged lower by shares of Broadcom, which are down 4.4%. Reuters is reporting that Palo Alto Networks and Fortinet are under pressure because Chinese authorities have told domestic companies to stop using cybersecurity software made by roughly a dozen U.S. and Israeli firms. Their shares are down 1.5% and 2.2%, respectively.

Looking Ahead: Moving Averages Will Reveal Investor Sentiment

Heading into the close, unless there is a massive short-covering rally late in the session, the indexes are going to close sharply lower. Selling could actually accelerate into the close if investors decide to move more money into cash because of the cloud of uncertainty floating above the market. Keep an eye on the reaction to the S&P 500 Index and Nasdaq-100 Index moving averages. They are going to express investor sentiment the best.

More Information in our Economic Calendar.