Nasdaq 100 Forecast: Will Payrolls Extend the Chip Selloff or Spark a Rally?

Chip Selloff Deepens Ahead of Payrolls

June E-mini Nasdaq-100 Index futures dropped more than 1% before the opening bell on Friday. S&P 500 futures fell about 0.5%. Dow futures held modest gains.

Broadcom extended Thursday’s 12% decline and the semiconductor selling is now in its second straight session.

The S&P 500 is still on track for its tenth consecutive positive week. That would be the longest winning streak since 1985. The Dow is heading for a weekly gain of about 1%. The Nasdaq is the problem. It is on pace for a weekly decline while everything else holds.

The May Nonfarm Payrolls report drops this morning and the reaction sets the direction going into next week.

Daily June E-mini Nasdaq-100 Index Technical Analysis

June E-mini Nasdaq-100 Index futures are edging lower on Friday after crossing to the weak side of a minor pivot at 30285.50. Trader reaction to this level should set the tone of the market today. The market is also trading below last week’s close at 30405.25. This puts it in a position to form a potentially bearish closing price reversal top. If confirmed next week, we could see the start of a 2 to 3 week correction with a break to 26884.75 to 25958.75 a strong possibility.

The main trend is up. A trade through 30807.75 will reaffirm the uptrend. A move through 28663.00 changes the main trend to down. These numbers also form the main range. The retracement zone target today is 29735.50 to 29482.25.

Recapturing and sustaining a move over 30285.50 will signal the return of buyers. Overcoming 30405.25 will indicate the buying is getting stronger.

A sustained move under 30285.00 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into 29735.50 to 29482.25. Since the main trend is up, buyers are likely to come in on a test of this area. If the market closes under this zone then look out to the downside next week.

Broadcom Selloff Spreads Across Chip Sector

Broadcom shares kept falling Friday morning after plunging more than 12% on Thursday. The selling has spread into Asia and European markets overnight. Advanced Micro Devices, Intel, Arm Holdings, Micron Technology, and Marvell Technology are all lower before the open.

The AI hardware trade ran hard all year and Broadcom showed what happens when a company meets expectations instead of beating them. The Street sold it and the rest of the sector followed. Two days of selling across the entire chip space tells you the positioning was heavy and the exits are getting crowded.

Charles Kantor at Neuberger Wealth said demand tied to data center expansion and computing infrastructure could continue supporting the sector well into the next decade. The long-term story may be intact. The near-term problem is that nobody wants to hold the trade through a second down day and a jobs report at the same time.

Nonfarm Payrolls Report Decides the Next Move

Economists expect the U.S. economy added approximately 80,000 jobs in May. That would be a significant slowdown from April’s 115,000. Goldman Sachs expects 60,000. EY-Parthenon expects 50,000. Vanguard is looking for just 20,000. The range of estimates is wide and the low end would force the market to rethink the entire higher-for-longer rate story.

A strong number reinforces the hawkish case and gives the 10-Year U.S. Treasury yield room to stay elevated. That keeps the pressure on growth stocks and the Nasdaq. A weak number brings rate-cut expectations back and that is the best thing that could happen for technology shares right now.

The unemployment rate is expected to hold at 4.3%.

Stocks in the News

Lululemon dropped sharply after the company lowered its full-year earnings and revenue guidance. Management said ongoing challenges would weigh on performance. When a growth name cuts guidance the selling is fast and the stock reflected it.

Docusign moved lower after revenue guidance came in below the Street despite solid operating results. ServiceTitan went the other direction. The software company raised its full-year outlook and the stock surged. Cooper Companies gained after earnings and revenue both beat expectations.

Bitcoin fell below $63,000 and the crypto names went with it. Strategy, Coinbase, and Robinhood all traded lower.

What to Watch

The chip selloff is in its second day and the Nasdaq is heading for a weekly decline while the S&P 500 chases its longest winning streak since 1985. That divergence tells you the market is not weak. The leadership is changing. Whether that rotation continues or reverses depends on this morning’s Nonfarm Payrolls number. A strong print keeps the pressure on technology and extends the money flow into value. A weak print brings the rate-cut trade back and gives the Nasdaq a reason to bounce.

The June E-mini Nasdaq-100 Index is trading below last week’s close at 30,405.25 and below the minor pivot at 30,285.50. That puts it in position for a weekly closing price reversal top. If confirmed next week the downside target is 29,735.50 to 29,482.25. A close under that zone opens up a 2 to 3 week correction.

More Information in our Economic Calendar.