Nasdaq 100 Today: Chip Buyers Return but Earnings Risk Stays High

Chip Bounce Lifts Nasdaq Before Earnings

Chip buyers are stepping back in Monday and the Nasdaq is doing the heavy lifting at the mid-session. The semiconductor group is bouncing after last week’s sharp selling and Alphabet is adding to the bid on reports it is developing AI chips in-house. The bounce is real but it is arriving just before the earnings reports that will decide whether the money stays. Intel, Texas Instruments, Alphabet and Tesla all report this week into a market that just finished selling technology at the fastest pace in months. Yemen’s Houthis are complicating the background with a naval blockade threat against Saudi Arabia.

At 11:50 GMT, the Nasdaq Composite is trading 29017.75, up 244.50 or +0.85%. The S&P 500 is at 7521.75, up 24.00 or +0.32%. The Dow Jones Industrial Average is trading 52257.00, down 118.00 or -0.23%.

That split tells you where the conviction is. Money is moving back into growth and technology. The rest of the market is sitting on its hands.

Daily September E-mini Nasdaq-100 Index Futures

September E-mini Nasdaq-100 Index futures are edging higher at the mid-session on Monday as investors hunt for bargains after the tech-heavy index touched its lowest level since May 6 on Friday at 28408.25.

It’s a little too early to determine what it means, but an inside move like today typically indicates investor indecision and impending volatility. Some also read it as a sign that the market may be transitioning from bull to bear. It is worth noting how it behaves.

Investors could be reading the recent sell-off as opportunity. If they can produce enough upside momentum then the index could retrace back to the 50-day moving average at 29859.20. A move like that won’t solve the longer-term problem of overvaluation. Since the index is below the 50-day and it’s produced a series of lower tops, while making lower-lows, I can build a case for it being in a short-term downtrend. What that typically means is some traders may be poised to forego the long-term up trend and step in front of the rally.

Other bearish short-term traders may be inclined to try to press the index lower in the hopes of an even bigger decline into the long-term retracement zone at 27142.25 to 26208.25 or the 200-day moving average at 26886.01.

So essentially, Friday’s low at 28408.25 has become a pivot price. Hold it, and buyers may try to recover the lost ground back to the 50-day MA. Lose it, and the 200-day MA becomes a reasonable target.

Chip Rebound Comes Off Bear-Market Levels

The Philadelphia SE Semiconductor Index is up 2.5% Monday but that follows a 20%-plus decline from the late-June record high. Bear-market territory. Alphabet is climbing 3.4% on reports Google is building its own AI chips, lifting communication services alongside the chipmakers. The chip plans are a nice headline. Intel and Texas Instruments earnings later this week are the real test of whether this group has buyers or just short covering.

Good Data Couldn’t Hold the AI Trade

S&P 500 earnings are expected to grow 26% year-over-year this quarter, up from 23.7% earlier, according to LSEG data. The market sold off anyway last week on softer inflation and solid bank numbers. Good data, lower prices. That tells you the problem is not the economy. The AI trade got ahead of itself and the correction started before earnings season could catch up.

Houthi Blockade Adds Another Layer

Yemen’s Houthis are imposing a naval blockade on Saudi Arabia. Another front in the conflict, another threat to energy supply lines. Rate hike odds at the July meeting are sitting at 15%.

Stocks in the News

Micron is up 5.1% and leading the semiconductor group at the mid-session. SanDisk is running 5.4% higher. Tesla, IBM and Intel are all on the earnings calendar this week.

What to Watch

The chip rebound needs earnings confirmation and the calendar will deliver it. Intel and Texas Instruments will tell traders whether this is a real bid or just short covering after bear-market-level selling. Alphabet and Tesla need to show the AI-linked names can still produce numbers worth paying for. Breadth is only slightly positive with advancers barely outnumbering decliners on both the NYSE and Nasdaq. Technology is carrying the tape alone and if the chip bid fades or the Houthi threat expands, growth stocks go first.

The inside move on the Nasdaq-100 futures signals indecision and the short-term trend is lower. The index is below the 50-day average with a pattern of lower highs. Friday’s low is the pivot. Hold it and buyers get a shot at recovery. Lose it and there is a deeper support zone waiting well below current levels.

More Information in our Economic Calendar.