Nasdaq 100: Tech Rebound Lifts US Indices Today as Traders Weigh Alphabet Forecast

Tech Rebound Lifts Futures Despite Mixed Alphabet Reaction

A tech sector recovery is helping to boost S&P 500 Index futures and Nasdaq-100 futures during the premarket session as traders continued to assess Alphabet’s earnings, released after the close on Wednesday.

At 08:15 GMT, E-mini Dow Futures are trading 49552.00, down 37.00 or -0.07%. E-mini S&P 500 Index Futures are at 6914.25, up 8.00 or +0.12% and E-mini Nasdaq-100 Index Futures are trading 25075.50, up 76.25 or +0.31%.

Alphabet’s AI Spending Sparks Divided Response

It’s a bit of a strange reaction in my opinion. Alphabet shares are down a little more than 1% overnight after the company forecast a sharp increase in artificial intelligence spending and projected 2026 capital expenditures of up to $185 billion. While the news didn’t actually excite Alphabet investors, it did excite some investors by boosting hopes for the AI trade. Nvidia and Broadcom investors liked the news, driving prices higher overnight.

Memory Shortage Weighs on Qualcomm Outlook

The outlook was still mixed, however, heading into the cash market opening with Qualcomm falling 9% after the company posted a weaker-than-expected forecast due to a global memory shortage.

Money Rotates from Tech into More Balanced Sectors

A weak tech sector has weighed on the S&P 500 Index and Nasdaq Composite Index for several days. The result has seen money rotating into the more balanced Dow Jones Industrial Average and out of the tech-heavy Nasdaq.

AI Profit Concerns Trigger Software Sector Selloff

The primary concerns for investors have been weak guidance about how AI capital is being spent and when it will return a profit. Concerns over AI replacing software are also fueling almost panic selling in software stocks. The software sector has been punished as fears of AI disruption have led to aggressive liquidation into more attractive but undervalued parts of the market.

Oversold Bounce or False Start?

Oversold conditions could also be behind today’s technical bounce but sellers could return early if Tapestry and Peloton Interactive disappoint before the opening. We also have the overhang from Alphabet that investors haven’t figured out how to play yet. The stock initially rose 6% after the earnings were released before dipping more than 2%. We could also be looking at early chop as some of the major players hit the sidelines ahead of Amazon’s results after the close.

Key Technical Levels to Watch

Overnight, March E-mini Nasdaq-100 Index futures are edging higher after hitting their lowest level since November 24 on Wednesday at 24783.50.

On the upside, the index faces major headwinds at a four-month down trendline at 25382.00 and a 50% level at 25411.75. Overcoming this area may shift momentum to the upside, but traders will still have to overcome the 50-day moving average at 25665.25 and sustain the move before we’ll call it a change in trend.

On the downside, taking out yesterday’s low at 24783.50 will reaffirm the downtrend and could fuel an acceleration to the downside with the November 21 main bottom at 24153.50 the next major target.

What Needs to Happen for a Sustained Rally

Looking ahead, although a technical bounce is possible today, it won’t mean much because it may just give bearish traders another opportunity to short into resistance. Additionally, rallies from spike bottoms tend to be sold. What this index needs is a solid support base before we can start looking for a sustained rally into new highs.

Amazon Earnings Could Provide the Catalyst

The steady market after the Alphabet earnings release on Wednesday combined with a similar reaction to Amazon’s earnings after the close today, could be the catalyst that shifts momentum to the upside, but it may take a few days to sort it all out.

More Information in our Economic Calendar.